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This  Memorial  Edition  of  the  Writings  of 
Henry  George  is  limited  to  one  thousand 
numbered  copies,  of  which  this  is 


No. 


H- 


MEMORIAL  EDITION 
OF  THE  WRITINGS 
OF  HENRY  GEORGE 

Vol    1. 


Make  for  tliyself  a  definition  or  description  of 
the  thing  which  is  presented  to  thee,  so  as  to  see 
distinctly  what  kind  of  a  thing  it  is,  in  its  sub- 
stance, in  its  nudity,  in  its  complete  entirety,  and 
tell  thyself  its  proper  name,  and  the  names  of  the 
things  of  which  it  has  been  compounded,  and  into 
which  it  will  be  resolved.  For  nothing  is  so  pro- 
ductive of  elevation  of  mind  as  to  be  able  to  ex- 
amine methodically  and  truly  every  object  which 
is  presented  to  thee  in  life,  and  always  to  look  at 
things  so  as  to  see  at  the  same  time  what  kind  of 
universe  this  is,  and  what  kind  of  use  everything 
performs  in  it,  and  what  value  everything  has 
with  reference  to  the  whole,  and  what  with  refer- 
ence to  man,  who  is  a  citizen  of  the  highest  city, 
of  which  all  other  cities  are  like  families ;  what 
each  thing  is,  and  of  what  it  is  composed,  and 
how  long  it  is  the  nature  of  this  thing  to  endure. 
— Marcus  Aurelius  Antoninus. 


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THE  WRITINGS  OF 
HENRY  GEORGE 


PROGRESS  AND 
POVERTY 

AN  INQUIRY  INTO  THE  CAUSE  OF  INDUS- 
TRIAL DEPRESSIONS  AND  OF  INCREASE 
OF  WANT  WITH   INCREASE   OF  WEALTH 

THE  REMEDY 
I 


NEW  YORK :  DOUBLEDAY 

AND  MCCLURE  COMPANY 

1898 


Copyright,  1891,  by 
Henry  George 


THeOeViNNE  Press. 


Jnsf.  Indus. 


HB 

'.       V     1 


V.I 


TO  THOSE  WHO, 

SEEING  THE  VICE  AND  SHSERY  THAT  SPRING  FROM 

THE   UNEQUAL  DISTRIBUTION 

OF  t\t:alth  and  privilege, 

FEEL  THE  POSSIBILITY   OF  A  HIGHER   SOCIAL  STATE 
AND  WOLTLD  STRIVE  FOR  ITS  ATTAINSIENT 

San  Fkancisco,  March,  1879. 


There  must  be  refuge  !     Men 
Perished  in  winter  winds  till  one  smote  fire 
From  flint  stones  coldly  hiding  what  they  held, 
The  red  spark  treasured  from  the  kindling  sun ; 
They  gorged  on  flesh  like  wolves,  till  one  sowed  corn, 
Which  grew  a  weed,  yet  makes  the  life  of  man ; 
They  mowed  and  babbled  till  some  tongue  struck  speech, 
And  patient  fingers  framed  the  lettered  sound. 
What  good  gift  have  my  brothers,  but  it  came 
From  search  and  strife  and  loving  sacrifice? 

Edwin  Arnold. 

Never  yet 
Share  of  Truth  was  vainly  set 
In  the  world's  wide  fallow ; 
After  hands  shall  sow  the  seed, 

After  hands,  from  hill  and  mead, 
Eeap  the  harvests  yellow. 

Whittier. 


PREFACE  TO  FOURTH  EDITION. 


The  views  herein  set  forth  were  in  the  main  briefly  stated  in  a 
pamphlet  entitled  "  Our  Land  and  Land  Policy,"  published  in  San 
Francisco  in  1871.  I  then  intended,  as  soon  as  I  could,  to  present 
them  more  fully,  but  the  opportunity  did  not  for  a  long  time  occur. 
In  the  meanwhile  I  became  even  more  firmly  convinced  of  their 
truth,  and  saw  more  completely  and  clearly  their  relations;  and  I 
also  saw  how  many  false  ideas  and  erroneous  habits  of  thought 
stood  in  the  way  of  their  recognition,  and  how  necessary  it  was  to  go 
over  the  whole  ground. 

This  I  have  here  tried  to  do,  as  thoroughly  as  space  would  permit. 
It  has  been  necessary  for  me  to  clear  away  before  I  could  build  up, 
and  to  write  at  once  for  those  who  have  made  no  previous  study  of 
such  subjects,  and  for  those  who  are  familiar  with  economic  reason- 
ings; and,  so  great  is  the  scope  of  the  argument  that  it  has  been 
impossible  to  treat  with  the  fullness  they  deserve  many  of  the  ques- 
tions raised.  What  I  have  most  endeavored  to  do  is  to  establish 
general  principles,  trusting  to  my  readers  to  carry  further  their 
applications  where  this  is  needed. 

In  certain  respects  this  book  will  be  best  appreciated  by  those  who 
have  some  knowledge  of  economic  literature;  but  no  previous  read- 
ing is  necessary  to  the  understanding  of  the  argument  or  the  passing 
of  judgment  upon  its  conclusions.  The  facts  upon  which  I  have 
relied  are  not  facts  which  can  be  verified  only  by  a  search  through 
libraries.  They  are  facts  of  common  observation  and  common 
knowledge,  which  every  reader  can  verify  for  himself,  just  as  he  can 
decide  whether  the  reasoning  from  them  is  or  is  not  valid. 

Beginning  with  a  brief  statement  of  facts  which  suggest  this  in- 
quiry, I  proceed  to  examine  the  explanation  currently  given  in  the 
name  of  political  economy  of  the  reason  why,  in  spite  of  the  increase 
of  productive  power,  wages  tend  to  the  minimum  of  a  bare  living. 
This  examination  shows  that  the  current  doctrine  of  wages  is  founded 
upon  a  misconception;  that,  in  truth,  wages  are  produced  by  the 
labor  for  which  they  are  paid,  and  should,  other  things  being  equal, 
increase  with  the  number  of  laborers.     Here  the  inquiry  meets  a 


VIU  PREFACE. 

doctrine  which  is  the  foundation  and  center  of  most  important 
economic  theories,  and  which  has  powerfully  influenced  thought  in 
all  directions — the  Malthusian  doctrine,  that  population  tends  to 
increase  faster  than  subsistence.  Examination,  however,  shows  that 
this  doctrine  has  no  real  support  either  in  fact  or  in  analogy,  and  that 
when  brought  to  a  decisive  test  it  is  utterly  disproved. 

Thus  far  the  results  of  the  inquiry,  though  extremely  important, 
are  mainly  negative.  They  show  that  current  theories  do  not  satis- 
factorily explain  the  connection  of  poverty  with  material  progress, 
but  throw  no  light  upon  the  problem  itself,  beyond  showing  that  its 
solution  must  be  sought  in  the  laws  which  govern  the  distribution  of 
wealth.  It  therefore  becomes  necessary  to  carry  the  inquiry  into 
this  field.  A  preliminary  review  shows  that  the  three  laws  of  dis- 
tribution must  necessarily  correlate  with  each  other,  which  as  laid 
down  by  the  current  political  economy  they  fail  to  do,  and  an  ex- 
amination of  the  terminology  in  use  reveals  the  confusion  of  thought 
by  which  this  discrepancy  has  been  slurred  over.  Proceeding  then 
to  work  out  the  laws  of  distribution,  I  first  take  up  the  law  of  rent. 
This,  it  is  readily  seen,  is  correctly  apprehended  by  the  current 
political  economy.  But  it  is  also  seen  that  the  full  scope  of  this  law 
has  not  been  appreciated,  and  that  it  involves  as  corollaries  the  laws 
of  wages  and  interest — the  cause  which  determines  what  part  of  the 
produce  shall  go  to  the  land  owner  necessarily  determining  what 
part  shall  be  left  for  labor  and  capital.  "Without  resting  here,  I  pro- 
ceed to  an  independent  deduction  of  the  laws  of  interest  and  wages. 
I  have  stopped  to  determine  the  real  cause  and  justification  of  in- 
terest, and  to  point  out  a  source  of  much  misconception — the  con- 
founding of  what  are  really  the  profits  of  monopoly  with  the  legiti- 
mate earnings  of  capital.  Then  returning  to  the  main  inquiry, 
investigation  shows  that  interest  must  rise  and  fall  with  wages,  and 
depends  ultimately  upon  the  same  thing  as  rent — the  margin  of 
cultivation  or  point  in  production  where  rent  begins.  A  similar  but 
independent  investigation  of  the  law  of  wages  yields  similar  har- 
monious results.  Thus  the  three  laws  of  distribution  are  brought 
into  mutual  support  and  harmony,  and  the  fact  that  with  material 
progress  rent  everywhere  advances  is  seen  to  explain  the  fact  that 
wages  and  interest  do  not  advance. 

What  causes  this  advance  of  rent  is  the  next  question  that  arises, 
and  it  necessitates  an  examination  of  the  effect  of  material  progress 
upon  the  distribution  of  wealth.  Separating  the  factors  of  material 
progress  into  increase  of  population  and  improvements  in  the  arts,  it 
is  first  seen  that  increase  in  population  tends  constantly,  not  merely 


PREFACE.  IX 

by  reducing  the  margin  of  cultivation,  but  by  localizing  the  econ- 
omies and  powers  which  come  with  increased  population,  to  increase 
the  proportion  of  the  aggregate  produce  which  is  taken  in  rent,  and 
to  reduce  that  which  goes  as  wages  and  interest.  Then  eliminating 
increase  of  population,  it  is  seen  that  improvement  in  the  methods 
and  powers  of  production  tends  in  the  same  direction,  and,  land  being 
held  as  private  property,  would  produce  in  a  stationary  population 
all  the  effects  attributed  by  the  Malthusian  doctrine  to  pressure  of 
population.  And  then  a  consideration  of  the  effects  of  the  continuous 
increase  in  land  values  which  thus  spring  from  material  progress 
reveals  in  the  speculative  advance  inevitably  begotten  when  land  is 
private  property  a  derivative  but  most  powerful  cause  of  the  increase 
of  rent  and  the  crowding  down  of  wages.  Deduction  shows  that 
this  cause  must  necessarily  produce  periodical  industrial  depressions, 
and  mduction  proves  the  conclusion;  while  from  the  analysis  which 
has  thus  been  made  it  is  seen  that  the  necessary  result  of  material 
progress,  land  being  private  property,  is,  no  matter  what  the  in- 
crease in  population,  to  force  laborers  to  wages  which  give  but  a 
bare  living. 

This  identification  of  the  cause  that  associates  poverty  with  prog- 
ress points  to  the  remedy,  but  it  is  to  so  radical  a  remedy  that  I  have 
next  deemed  it  necessary  to  inquire  whether  there  is  any  other 
remedy.  Beginning  the  investigation  again  from  another  starting 
point,  I  have  passed  in  examination  the  measures  and  tendencies 
currently  advocated  or  trusted  in  for  the  improvement  of  the  condi- 
tion of  the  laboring  masses.  The  result  of  this  investigation  is  to 
prove  the  preceding  one,  as  it  shows  that  nothing  short  of  making 
land  common  property  can  permanently  relieve  poverty  and  check 
the  tendency  of  wages  to  the  starvation  point. 

The  question  of  justice  now  naturally  arises,  and  the  inquiry 
passes  into  the  field  of  ethics.  An  investigation  of  the  nature  and 
basis  of  property  shows  that  there  is  a  fundamental  and  irreconcil- 
able difference  between  property  in  things  which  are  the  product  of 
labor  and  property  in  land;  that  the  one  has  a  natural  basis  and 
sanction  while  the  other  has  none,  and  that  the  recognition  of  ex- 
clusive property  in  land  is  necessarily  a  denial  of  the  right  of  prop- 
erty in  the  products  of  labor.  Further  investigation  shows  that 
private  property  in  land  always  has,  and  always  must,  as  develop- 
ment proceeds,  lead  to  the  enslavement  of  the  laboring  class;  that 
land  owners  can  make  no  just  claim  to  compensation  if  society  choose 
to  resume  its  right;  that  so  far  from  private  property  in  land  being 
in  accordance  with  the  natural  perceptions  of  men,  the  very  reverse 


X  PREFACE. 

is  true,  and  that  in  the  United  States  we  are  already  beginning  to 
feel  the  effects  of  having  admitted  this  erroneous  and  destructive 
principle. 

The  inquiry  then  passes  to  the  field  of  practical  statesmanship. 
It  is  seen  that  private  property  in  land,  instead  of  being  necessary  to 
its  improvement  and  use,  stands  in  the  way  of  improvement  and  use, 
and  entails  an  enormous  waste  of  productive  forces;  that  the  recog- 
nition of  the  common  right  to  land  involves  no  shock  or  dispossession, 
but  is  to  be  reached  by  the  simple  and  easy  method  of  abolishing 
all  taxation  save  that  upon  land  values.  And  this  an  inquiry  into 
the  principles  of  taxation  shows  to  be,  in  all  respects,  the  best  subject 
of  taxation. 

A  consideration  of  the  effects  of  the  change  proposed  then  shows 
that  it  would  enormously  increase  production;  would  secure  justice 
in  distribution;  would  benefit  all  classes;  and  would  make  possible 
an  advance  to  a  higher  and  nobler  civilization. 

The  inquiry  now  rises  to  a  wider  field,  and  recommences  from 
another  starting  point.  For  not  only  do  the  hopes  which  have  been 
raised  come  into  collision  with  the  widespread  idea  that  social  prog- 
ress is  possible  only  by  slow  race  improvement,  but  the  conclusions 
we  have  arrived  at  assert  certain  laws  which,  if  they  are  really  nat- 
ural laws,  must  be  manifest  in  universal  history.  As  a  final  test,  it 
therefore  becomes  necessary  to  work  out  the  law  of  human  progress, 
for  certain  great  facts  which  force  themselves  on  our  attention,  as 
soon  as  we  begin  to  consider  this  subject,  seem  utterly  inconsistent 
with  what  is  now  the  current  theory.  This  inquiry  shows  that  dif- 
ferences in  civilization  are  not  due  to  differences  in  individuals,  but 
rather  to  differences  in  social  organization ;  that  progress,  always 
kindled  by  association,  always  passes  into  retrogression  as  inequality 
is  developed;  and  that  even  now,  in  modern  civilization,  the  causes 
which  have  destroyed  all  previous  civilizations  are  beginning  to 
manifest  themselves,  and  that  mere  political  democracy  is  running 
its  course  toward  anarchy  and  despotism.  But  it  also  identifies  the 
law  of  social  life  with  the  great  moral  law  of  justice,  and,  proving 
previous  conclusions,  shows  how  retrogression  may  be  prevented 
and  a  grander  advance  begun.  This  ends  the  inquiry.  The  final 
chapter  will  explain  itself. 

The  great  importance  of  this  inquiry  will  be  obvious.  If  it  has 
been  carefully  and  logically  pursued,  its  conclusions  completely 
change  the  character  of  political  economy,  give  it  the  coherence  and 
certitude  of  a  true  science,  and  bring  it  into  full  sympathy  with  the 
aspirations  of  the  masses  of  men,  from  which  it  has  long  been  es- 


PEEFAGE.  Xi 

tranged.  What  I  have  done  in  this  book,  if  I  have  correctly  solved 
the  great  problem  I  have  sought  to  investigate,  is,  to  unite  the  truth 
perceived  by  the  school  of  Smith  and  Ricardo  to  the  truth  perceived 
by  the  schools  of  Proudhon  and  Lasalle;  to  show  that  laissez  faire 
(in  its  full  true  meaning)  opens  the  way  to  a  realization  of  the  noble 
dreams  of  socialism;  to  identify  social  law  with  moral  law,  and  to 
disprove  ideas  which  in  the  minds  of  many  cloud  grand  and  elevat- 
ing perceptions. 

This  work  was  written  between  August,  1877,  and  March,  1879, 
and  the  plates  finished  by  September  of  that  year.  Since  that  time 
new  illustrations  have  been  given  of  the  correctness  of  the  views 
herein  advanced,  and  the  march  of  events — and  especially  that  great 
movement  which  has  begun  in  Great  Britain  in  the  Irish  land  agita- 
tion— shows  still  more  clearly  the  pressing  nature  of  the  problem 
I  have  endeavored  to  solve.  But  there  has  been  nothing  in  the 
criticisms  they  have  received  to  induce  the  change  or  modification 
of  these  views — in  fact,  I  have  yet  to  see  an  objection  not  answered 
in  advance  in  the  book  itself.  And  except  that  some  verbal  errors 
have  been  corrected  and  a  preface  added,  this  edition  is  the  same  as 
previous  ones. 

Henry  George. 

New  York,  November,  1880. 


CONTENTS. 


Introductory. 

PAGE 

The  Problem 3 

Book  I.— Wages  and  Capital. 

Chapter    I.  —The  current  doctrine  of  wages— its  insufficiency 17 

n.— The  meaning  of  the  terms 30 

lU.— Wages  not  drawn  from  capital,  but  produced  by  the  labor 49 

IV. — The  maintenance  of  laborers  not  drawn  from  capital ,  70 

v.— The  real  functions  of  capital 79 

Book  U.— Population  and  Subsistence. 

Chapter    I.— The  Malthusian  theory,  its  genesis  and  support 91 

n.— Inferences  from  facts 103 

III.— Inferences  from  analogy 129 

IV.— Disproof  of  the  Blalthusian  theory. 140 

Book  III.— The  Laws  op  Distribution. 
Chapter    I.— The  inquiry  narrowed  to  the  laws  of  distribution— necessary 

relation  of  these  laws 153 

II.— Rent  and  the  law  of  rent 165 

III.— Interest  and  the  cause  of  interest 173 

IV.— Of  spurious  capital  and  of  profits  often  mistaken  for  interest. .  189 

v.— The  law  of  interest 195 

VI.— Wages  and  the  law  of  wages 204 

Vn.— Correlation  and  co-ordination  of  these  laws 217 

Vni.— The  statics  of  the  problem  thus  explained S19 

Book  IV.  —Effect  op  Material  Progress  upon  the  Distribution  op  Wealth  . 

Chapter    I.— The  dynamics  of  the  problem  yet  to  seek 235 

II.— Effect  of  increase  of  population  upon  the  distribution  of  wealth  228 
in.— Effect  of  improvements  in  the  arts  upon  the  distribution  of 

wealth 342 

rv.— Effect  of  the  expectation  raised  by  material  progress 253 

Book  V.— The  Problem  Solved. 

Chapter    I.— The  primary    cause  of  recurring    paroxysms    of    industrial 

depression 261 

II.— The  persistence  of  poverty  amid  advancing  wealth 280 


XIV  CONTENTS. 

Book  VI.— The  Remedy. 

Chapter    I.— Insufficiency  of  remedies  currently  advocated 297 

II.— The  true  remedy 326 

Book  VII.— Justice  of  the  Remedy. 

Chapter    I. — Injustice  of  private  property  in  land 331 

n. — Enslavement  of  laborers  the  ultimate  result  of  private  property 

in  land 345 

rn.— Claim  of  land  owners  to  compensation 356 

IV.— Property  in  land  historically  considered 366 

v.— Property  in  land  in  the  United  States 383 

Book  vm.— Application  op  the  Remedy. 

Chapter    I. — Private  property  in  land  inconsistent  with  the  best  use  of  land.  395 

II. — How  equal  rights  to  the  land  may  be  asserted  and  secured 401 

ni. — The  proposition  tried  by  the  canons  of  taxation 406 

IV.— Indorsements  and  objections 420 

Book  IX.— Effects  of  the  Remedy. 

Chapter    I.— Of  the  effect  upon  the  production  of  wealth 431 

II.— Of  the  effect  upon  distribution  and  thence  upon  production 438 

in. — Of  the  effect  upon  individuals  and  classes 445 

IV.— Of  the  changes  that  would  be  wrought  in  social  organization 

and  social  life 452 

Book  X.— The  Law  op  Human  Progress. 

Chapter    I.— The  current  theory  of  human  progress— its  insufficiency 473 

II.— Differences  in  civiUzation- to  what  due 487 

III.— The  law  of  human  progress 503 

IV.— How  modern  civilization  may  decline 524 

v.— The  central  truth 541 

Conclusion. 
The  problem  of  individual  life = 553 


INTRODUCTORY. 


THE  PKOBLEM. 


Ye  build!  ye  build!  but  ye  enter  not  in, 

Like  the  tribes  whom  the  desert  devoured  in  their  sin; 

From  the  laud  of  promise  ye  fade  and  die, 

Ere  its  verdure  gleams  forth  on  your  wearied  eye. 

— Mrs.  Sigourney. 


INTRODUCTORY. 


THE  PROBLEM. 

The  present  century  has  been  marked  by  a  prodigious 
increase  in  wealth-producing  power.  The  utilization  of 
steam  and  electricity,  the  introduction  of  improved  proc- 
esses and  labor-saving  machinery,  the  greater  subdivision 
and  grander  scale  of  production,  the  wonderful  facilita- 
tion of  exchanges,  have  multiplied  enormously  the  effect- 
iveness of  labor. 

At  the  beginning  of  this  marvelous  era  it  was  natural 
to  expect,  and  it  was  expected,  that  labor-saving  inven- 
tions would  lighten  the  toil  and  improve  the  condition  of 
the  laborer;  that  the  enormous  increase  in  the  power  of 
producing  wealth  would  make  real  poverty  a  thing  of  the 
past.  Could  a  man  of  the  last  century — a  Franklin  or  a 
Priestley — ^have  seen,  in  a  vision  of  the  future,  the 
steamship  taking  the  place  of  the  sailing  vessel,  the  rail- 
road train  of  the  wagon,  the  reaping  machine  of  the 
scythe,  the  threshing  machine  of  the  flail;  could  he  have 
heard  the  throb  of  the  engines  that  in  obedience  to 
human  will,  and  for  the  satisfaction  of  human  desire, 
exert  a  power  greater  than  that  of  all  the  men  and  all 
the  beasts  of  burden  of  the  earth  combined;  could  he 
have  seen  the  forest  tree  transformed  into  finished 
lumber — into  doors,  sashes,  blinds,  boxes  or  barrels, 
with  hardly  the  touch  of  a  human  hand;  the  great  work- 
shops where  boots  and  shoes  are  turned  out  by  the  case 
with  less  labor  than  the  old-fashioned  cobbler  could  have 


4  INTRODUCTORY. 

put  on  a  sole;  the  factories  where,  under  the  eye  of  a 
girl,  cotton  becomes  cloth  faster  than  hundreds  of  stal- 
wart weavers  could  have  turned  it  out  with  their  hand- 
looms;  could  he  have  seen  steam  hammers  shaping  mam- 
moth shafts  and  mighty  anchors,  and  delicate  machinery 
making  tiny  watches;  the  diamond  drill  cutting  through 
the  heart  of  the  rocks,  and  coal  oil  sparing  the  whale; 
could  he  have  realized  the  enormous  saving  of  labor 
resulting  from  improved  facilities  of  exchange  and  com- 
munication— sheep  killed  in  Australia  eaten  fresh  in 
England,  and  the  order  given  by  the  London  banker  in 
the  afternoon  executed  in  San  Francisco  in  the  morning 
of  the  same  day;  could  he  have  conceived  of  the  hundred 
thousand  improvements  which  these  only  suggest,  what 
would  he  have  inferred  as  to  the  social  condition  of  man- 
kind? 

It  would  not  have  seemed  like  an  inference;  further 
than  the  vision  went  it  would  have  seemed  as  though  he 
saw;  and  his  heart  would  have  leaped  and  his  nerves 
would  have  thrilled,  as  one  who  from  a  height  beholds 
just  ahead  of  the  thirst-stricken  caravan  the  living  gleam 
of  rustling  woods  and  the  glint  of  laughing  waters. 
Plainly,  in  the  sight  of  the  imagination,  he  would  have 
beheld  these  new  forces  elevating  society  from  its  very 
foundations,  lifting  the  very  poorest  above  the  possibility 
of  want,  exempting  the  very  lowest  from  anxiety  for  the 
material  needs  of  life;  he  would  have  seen  these  slaves  of 
the  lamp  of  knowledge  taking  on  themselves  the  tradi- 
tional curse,  these  muscles  of  iron  and  sinews  of  steel 
making  the  poorest  laborer's  life  a  holiday,  in  which 
every  high  quality  and  noble  impulse  could  have  scope  to 
grow. 

And  out  of  these  bounteous  material  conditions  he 
would  have  seen  arising,  as  necessary  sequences,  moral 
conditions  realizing  the  golden  age  of  which  mankind 
have  always  dreamed.     Youth  no  longer  stunted   and 


THE   PEOBLEM.  5 

starved;  age  no  longer  harried  by  avarice;  the  child  at 
play  with  the  tiger;  the  man  with  the  muck-rake  drink- 
ing in  the  glory  of  the  stars:  Foul  things  fled,  fierce 
things  tame;  discord  turned  to  harmony!  For  how  could 
there  be  greed  where  all  had  enough?  How  could  the 
vice,  the  crime,  the  ignorance,  the  brutality,  that  spring 
from  poverty  and  the  fear  of  poverty,  exist  where  pov- 
erty had  vanished?  Who  should  crouch  where  all  were 
freemen;  who  oppress  where  all  were  peers? 

More  or  less  vague  or  clear,  these  have  been  the  hopes, 
these  the  dreams  born  of  the  improvements  which  give 
this  wonderful  century  its  preeminence.  They  have  sunk 
so  deeply  into  the  popular  mind  as  radically  to  change 
the  currents  of  thought,  to  recast  creeds  and  displace  the 
most  fundamental  conceptions.  The  haunting  visions  of 
higher  possibilities  have  not  merely  gathered  splendor 
and  vividness,  but  their  direction  has  changed — ^instead 
of  seeing  behind  the  faint  tinges  of  an  expiring  sunset, 
all  the  glory  of  the  daybreak  has  decked  the  skies  before. 

It  is  true  that  disappointment  has  followed  disappoint- 
ment, and  that  discovery  upon  discovery,  and  invention 
after  invention,  have  neither  lessened  the  toil  of  those 
who  most  need  respite,  nor  brought  plenty  to  the  poor. 
But  there  have  been  so  many  things  to  which  it  seemed 
this  failure  could  be  laid,  that  up  to  our  time  the  new 
faith  has  hardly  weakened.  We  have  better  appreciated 
the  difficulties  to  be  overcome;  but  not  the  less  trusted 
that  the  tendency  of  the  times  was  to  overcome  them. 

Now,  however,  we  are  coming  into  collision  with  facts 
which  there  can  be  no  mistaking.  From  all  parts  of  the 
civilized  world  come  complaints  of  industrial  depression; 
of  labor  condemned  to  involuntary  idleness;  of  capital 
massed  and  wasting;  of  pecuniary  distress  among  busi- 
ness men;  of  want  and  suffering  and  anxiety  among  the 
working  classes.  All  the  dull,  deadening  pain,  all  the 
keen,  maddening  anguish,  that  to  great  masses  of  men 


6  INTRODUCTOKY. 

are  involved  in  the  words  "hard  times,"  afflict  the  world 
to-day.  This  state  of  things,  common  to  communities 
differing  so  widely  in  situation,  in  political  institutions, 
in  fiscal  and  financial  systems,  in  density  of  population 
and  in  social  organization,  can  hardly  be  accounted  for 
by  local  causes.  There  is  distress  where  large  standing 
armies  are  maintained,  but  there  is  also  distress  where 
the  standing  armies  are  nominal;  there  is  distress  where 
protective  tariffs  stupidly  and  wastefuUy  hamper  trade, 
but  there  is  also  distress  where  trade  is  nearly  free;  there 
is  distress  where  autocratic  government  yet  prevails,  but 
thero  is  also  distress  where  political  power  is  wholly  in 
the  hands  of  the  people;  in  countries  where  paper  is 
money,  and  in  countries  where  gold  and  silver  are  the 
only  currency.  Evidently,  beneath  all  such  things  as 
these,  we  must  infer  a  common  cause. 

That  there  is  a  common  cause,  and  that  it  is  either 
what  we  call  material  progress  or  something  closely  con- 
nected with  material  progress,  becomes  more  than  an 
inference  when  it  is  noted  that  the  phenomena  we  class 
together  and  speak  of  as  industrial  depression  are  but 
intensifications  of  phenomena  which  always  accompany 
material  progress,  and  which  show  themselves  more 
clearly  and  strongly  as  material  progress  goes  on.  Where 
the  conditions  to  which  material  progress  everywhere 
tends  are  most  fully  realized — that  is  to  say,  where  popu- 
lation is  densest,  wealth  greatest,  and  the  machinery  of 
production  and  exchange  most  highly  developed — we  find 
the  deepest  poverty,  the  sharpest  struggle  for  existence, 
and  the  most  of  enforced  idleness. 

It  is  to  the  newer  countries — ^that  is,  to  the  countries 
where  material  progress  is  yet  in  its  earlier  stages — that 
laborers  emigrate  in  search  of  higher  wages,  and  capital 
flows  in  search  of  higher  interest.  It  is  in  the  older 
countries — that  is  to  say,  the  countries  where  material 
progress  has  reached  later  stages — that  widespread  desti- 


THE   PROBLEM.  7 

tution  is  found  in  the  midst  of  the  greatest  abundance. 
Go  into  one  of  the  new  communities  where  Anglo-Saxon 
vigor  is  just  beginning  the  race  of  progress;  where  the 
machinery  of  production  and  exchange  is  yet  rude  and 
inefficient;  where  the  increment  of  wealth  is  not  yet 
great  enough  to  enable  any  class  to  live  in  ease  and 
luxury;  where  the  best  house  is  but  a  cabin  of  logs  or  a 
cloth  and  paper  shanty,  and  the  richest  man  is  forced  to 
daily  work — and  though  you  will  find  an  absence  of 
wealth  and  all  its  concomitants,  you  will  find  no  beggars. 
There  is  no  luxury,  but  there  is  no  destitution.  No  one 
makes  an  easy  living,  nor  a  very  good  living;  but  every 
one  can  make  a  living,  and  no  one  able  and  willing  to 
work  is  oppressed  by  the  fear  of  want. 

But  just  as  such  a  community  realizes  the  conditions 
which  all  civilized  communities  are  striving  for,  and  ad- 
vances in  the  scale  of  material  progress — just  as  closer 
settlement  and  a  more  intimate  connection  with  the  rest 
of  the  world,  and  greater  utilization  of  labor-saving  ma- 
chinery, make  possible  greater  economies  in  production 
and  exchange,  and  wealth  in  consequence  increases,  not 
merely  in  the  aggregate,  but  in  proportion  to  population 
— so  does  poverty  take  a  darker  aspect.  Some  get  an 
infinitely  better  and  easier  living,  but  others  find  it  hard 
to  get  a  living  at  all.  The  "tramp"  comes  with  the  loco- 
motive, and  almshouses  and  prisons  are  as  surely  the 
marks  of  "material  progress"  as  are  costly  dwellings, 
rich  warehouses,  and  magnificent  churches.  Upon 
streets  lighted  with  gas  and  patrolled  by  uniformed 
policemen,  beggars  wait  for  the  passer-by,  and  in  the 
shadow  of  college,  and  library,  and  museum,  are  gather- 
ing the  more  hideous  Huns  and  fiercer  Vandals  of  whom 
Macaulay  prophesied. 

This  fact — the  great  fact  that  poverty  and  all  its  con- 
comitants show  themselves  in  communities  just  as  they 
develop  into  the  conditions  toward  which  material  prog- 


8  INTKODUCTORY. 

ress  tends — proves  that  the  social  diflBculties  existing 
wherever  a  certain  stage  of  progress  has  been  reached,  do 
not  arise  from  local  circumstances,  but  are,  in  some  way 
or  another,  engendered  by  progress  itself. 

And,  unpleasant  as  it  may  be  to  admit  it,  it  is  at  last 
becoming  evident  that  the  enormous  increase  in  produc- 
tive power  which  has  marked  the  present  century  and  is 
still  going  on  with  accelerating  ratio,  has  no  tendency 
to  extirpate  poverty  or  to  lighten  the  burdens  of  those 
compelled  to  toil.  It  simply  widens  the  gulf  between 
Dives  and  Lazarus,  and  makes  the  struggle  for  existence 
more  intense.  The  march  of  invention  has  clothed 
mankind  with  powers  of  which  a  century  ago  the  boldest 
imagination  could  not  have  dreamed.  But  in  factories 
where  labor-saving  machinery  has  reached  its  most  won- 
derful development,  little  children  are  at  work;  wherever 
the  new  forces  are  anything  like  fully  utilized,  large 
classes  are  maintained  by  charity  or  live  on  the  verge  of 
recourse  to  it;  amid  the  greatest  accumulations  of  wealth, 
men  die  of  starvation,  and  puny  infants  suckle  dry 
breasts;  while  everywhere  the  greed  of  gain,  the  worship 
of  wealth,  shows  the  force  of  the  fear  of  want.  The 
promised  land  flies  before  us  like  the  mirage.  The  fruits 
of  the  tree  of  knowledge  turn  as  we  grasp  them  to 
apples  of  Sodom  that  crumble  at  the  touch. 

It  is  true  that  wealth  has  been  greatly  increased,  and 
that  the  average  of  comfort,  leisure,  and  refinement  has 
been  raised;  but  these  gains  are  not  general.  In  them 
the  lowest  class  do  not  share.*     I  do  not  mean  that  the 

*  It  is  true  that  the  poorest  may  now  in  certain  ways  enjoy  what 
the  richest  a  century  ago  could  not  have  commanded,  but  this  does 
not  show  improvement  of  condition  so  long  as  the  ability  to  obtain 
the  necessaries  of  life  is  not  increased.  The  beggar  in  a  great  city 
may  enjoy  many  things  from  which  the  backwoods  farmer  is  de- 
barred, but  that  does  not  prove  the  condition  of  the  city  beggar 
better  than  that  of  the  independent  farmer. 


THE   PKOBLEM.  9 

condition  of  the  lowest  class  has  nowhere  nor  in  anything 
been  improved;  but  that  there  is  nowhere  any  improve- 
ment which  can  be  credited  to  increased  productive  power. 
I  mean  that  the  tendency  of  what  we  call  material  prog- 
ress is  in  nowise  to  improve  the  condition  of  the  lowest 
class  in  the  essentials  of  healthy,  happy  human  life. 
Nay,  more,  that  it  is  still  further  to  depress  the  condition 
of  the  lowest  class.  The  new  forces,  elevating  in  their 
nature  though  they  be,  do  not  act  upon  the  social  fabric 
from  underneath,  as  was  for  a  long  time  hoped  and  be- 
lieved, but  strike  it  at  a  point  intermediate  between  top 
and  bottom.  It  is  as  though  an  immense  wedge  were 
being  forced,  not  underneath  society,  but  through  soci- 
ety. Those  who  are  above  the  point  of  separation  are 
elevated,  but  those  who  are  below  are  crushed  down. 

This  depressing  effect  is  not  generally  realized,  for  it 
is  not  apparent  where  there  has  long  existed  a  class  just 
able  to  live.  Where  the  lowest  class  barely  lives,  as  has 
been  the  case  for  a  long  time  in  many  parts  of  Europe, 
it  is  imi3ossible  for  it  to  get  any  lower,  for  the  next  low- 
est step  is  out  of  existence,  and  no  tendency  to  further 
depression  can  readily  show  itself.  But  in  the  progress 
of  new  settlements  to  the  conditions  of  older  communi- 
ties it  may  clearly  be  seen  that  material  progress  does  not 
merely  fail  to  relieve  poverty — it  actually  produces  it. 
In  the  United  States  it  is  clear  that  squalor  and  misery, 
and  the  vices  and  crimes  that  spring  from  them,  every- 
where increase  as  the  village  grows  to  the  city,  and  the 
march  of  development  brings  the  advantages  of  the  im- 
proved methods  of  production  and  exchange.  It  is  in 
the  older  and  richer  sections  of  the  Union  that  pauperism 
and  distress  among  the  working  classes  are  becoming 
most  painfully  apparent.  If  there  is  less  deep  poverty  in 
San  Francisco  than  in  New  York,  is  it  not  because  San 
Francisco  is  yet  behind  New  York  in  all  that  both  cities 
are  striving  for?    When  San  Francisco  reaches  the  point 


10  INTRODUCTORY. 

where  New  York  now  is,  who  can  doubt  that  there  will 
also  be  ragged  and  barefooted  children  on  her  streets? 

This  association  of  poverty  with  progress  is  the  great 
enigma  of  our  times.  It  is  the  central  fact  from  which 
spring  industrial,  social,  and  political  difficulties  that 
perplex  the  world,  and  with  which  statesmanship  and 
philanthropy  and  education  grapple  in  vain.  From  it 
come  the  clouds  that  overhang  the  future  of  the  most 
progressive  and  self-reliant  nations.  It  is  the  riddle 
which  the  Sphinx  of  Fate  puts  to  our  civilization,  and 
which  not  to  answer  is  to  be  destroyed.  So  long  as  all 
the  increased  wealth  which  modern  progress  brings  goes 
but  to  build  up  great  fortunes,  to  increase  luxury  and 
make  sharper  the  contrast  between  the  House  of  Have 
and  the  House  of  "Want,  progress  is  not  real  and  cannot 
be  permanent.  The  reaction  must  come.  The  tower 
leans  from  its  foundations,  and  every  new  story  but 
hastens  the  final  catastrophe.  To  educate  men  who 
must  be  condemned  to  poverty,  is  but  to  make  them 
restive;  to  base  on  a  state  of  most  glaring  social  in- 
equality political  institutions  under  which  men  are 
theoretically  equal,  is  to  stand  a  pyramid  on  its  apex. 

All-important  as  this  question  is,  pressing  itself  from 
every  quarter  painfully  upon  attention,  it  has  not  yet  re- 
ceived a  solution  which  accounts  for  all  the  facts  and 
points  to  any  clear  and  simple  remedy.  This  is  shown 
by  the  widely  varying  attempts  to  account  for  the  pre- 
vailing depression.  They  exhibit  not  merely  a  diver- 
gence between  vulgar  notions  and  scientific  theories,  but 
also  show  that  the  concurrence  which  should  exist  be- 
tween those  who  avow  the  same  general  theories  breaks 
up  upon  practical  questions  into  an  anarchy  of  opinion. 
Upon  high  economic  authority  we  have  been  told  that 
the  prevailing  depression  is  due  to  over-consumption; 
upon  equally  high  authority,  that  it  is  due  to  over-pro- 
duction; while  the  wastes  of  war,  the  extension  of  rail- 


THE    PROBLEM.  11 

roads,  the  attempts  of  workmen  to  keep  up  wages,  the 
demonetization  of  silver,  the  issues  of  paper  money,  the 
increase  of  labor-saving  machinery,  the  opening  of 
shorter  avenues  to  trade,  etc.,  are  separately  pointed 
out  as  the  cause,  by  writers  of  reputation. 

And  while  professors  thus  disagree,  the  ideas  that 
there  is  a  necessary  conflict  between  capital  and  labor, 
that  machinery  is  an  evil,  that  competition  must  be  re- 
strained and  interest  abolished,  that  wealth  may  be 
created  by  the  issue  of  money,  that  it  is  the  duty  of  gov- 
ernment to  furnish  capital  or  to  furnish  work,  are 
rapidly  making  way  among  the  great  body  of  the  people, 
who  keenly  feel  a  hurt  and  are  sharply  conscious  of  a 
wrong.  Such  ideas,  which  bring  great  masses  of  men, 
the  repositories  of  ultimate  political  power,  under  the 
leadership  of  charlatans  and  demagogues,  are  fraught 
with  danger;  but  they  cannot  be  successfully  combated 
until  political  economy  shall  give  some  answer  to  the 
great  question  which  shall  be  consistent  with  all  her 
teachings,  and  which  shall  commend  itself  to  the  per- 
ceptions of  the  great  masses  of  men. 

It  must  be  within  the  province  of  political  economy  to 
give  such  an  answer.  For  political  economy  is  not  a  set 
of  dogmas.  It  is  the  explanation  of  a  certain  set  of 
facts.  It  is  the  science  which,  in  the  sequence  of  certain 
phenomena,  seeks  to  trace  mutual  relations  and  to  iden- 
tify cause  and  effect,  just  as  the  physical  sciences  seek  to 
do  in  other  sets  of  phenomena.  It  lays  its  foundations 
upon  firm  ground.  The  premises  from  which  it  makes 
its  deductions  are  truths  which  have  the  highest  sanc- 
tion; axioms  which  we  all  recognize;  upon  which  we 
safely  base  the  reasoning  and  actions  of  every-day  life, 
and  which  may  be  reduced  to  the  metaphysical  expres- 
sion of  the  physical  law  that  motion  seeks  the  line  of 
least  resistance — viz.,  that  men  seek  to  gratify  their  de- 
sires with  the  least  exertion.     Proceeding  from  a  basis 


12  INTRODUCTORY. 

thus  assured,  its  processes,  which  consist  simply  in 
identification  and  separation,  have  the  same  certainty. 
In  this  sense  it  is  as  exact  a  science  as  geometry,  which, 
from  similar  truths  relative  to  space,  obtains  its  conclu- 
sions by  similar  means,  and  its  conclusions  when  valid 
should  be  as  self-apparent.  And  although  in  the  domain 
of  political  economy  we  cannot  test  our  theories  by  arti- 
ficially produced  combinations  or  conditions,  as  may  be 
done  in  some  of  the  other  sciences,  yet  we  can  apply 
tests  no  less  conclusive,  by  comparing  societies  in  which 
different  conditions  exist,  or  by,  in  imagination,  separat- 
ing, combining,  adding  or  eliminating  forces  or  factors 
of  known  direction. 

I  propose  in  the  following  pages  to  attempt  to  solve  by 
the  methods  of  political  economy  the  great  problem  I 
have  outlined.  I  propose  to  seek  the  law  which  associ- 
ates poverty  with  progress,  and  increases  want  with 
advancing  wealth;  and  I  believe  that  in  the  explanation 
of  this  paradox  we  shall  find  the  explanation  of  those 
recurring  seasons  of  industrial  and  commercial  paralysis 
which,  viewed  independently  of  their  relations  to  more 
general  phenomena,  seem  so  inexplicable.  Properly 
commenced  and  carefully  pursued,  such  an  investigation 
must  yield  a  conclusion  that  will  stand  every  test,  and  as 
truth,  will  correlate  Avith  all  other  truth.  For  in  the 
sequence  of  phenomena  there  is  no  accident.  Every 
effect  has  a  cause,  and  every  fact  implies  a  preceding 
fact. 

That  political  economy,  as  at  present  taught,  does  not 
explain  the  persistence  of  poverty  amid  advancing  wealth 
in  a  manner  which  accords  with  the  deep-seated  percep- 
tions of  men;  that  the  unquestionable  truths  which  it 
does  teach  are  unrelated  and  disjointed;  that  it  has  failed 
to  make  the  progress  in  popular  thought  that  truth, 
even  when  unpleasant,  must  make;  that,  on  the  con- 
trary, after  a  century  of  cultivation,  during  which  it  has 


THE   PROBLEM.  13 

engrossed  the  attention  of  some  of  the  most  subtle  and 
powerful  intellects,  it  should  be  spurned  by  the  statsman, 
scouted  by  the  masses,  and  relegated  in  the  opinion  of 
many  educated  and  thinking  men  to  the  rank  of  a 
pseudo-science  in  which  nothing  is  fixed  or  can  be  fixed — 
must,  it  seems  to  me,  be  due  not  to  any  inability  of  the 
science  when  properly  pursued,  but  to  some  false  step 
in  its  premises,  or  overlooked  factor  in  its  estimates. 
And  as  such  mistakes  are  generally  concealed  by  the  re- 
spect paid  to  authority,  I  propose  in  this  inquiry  to  take 
nothing  for  granted,  but  to  bring  even  accepted  theories 
to  the  test  of  first  principles,  and  should  they  not  stand 
the  test,  freshly  to  interrogate  facts  in  the  endeavor  to 
discover  their  law. 

I  propose  to  beg  no  question,  to  shrink  from  no  con- 
clusion, but  to  follow  truth  wherever  it  may  lead.  Upon 
us  is  the  responsibility  of  seeking  the  law,  for  in  the  very 
heart  of  our  civilization  to-day  women  faint  and  little 
children  moan.  But  what  that  law  may  prove  to  be  is 
not  our  aifair.  If  the  conclusions  that  we  reach  run 
counter  to  our  prejudices,  let  us  not  flinch;  if  they  chal- 
lenge institutions  that  have  long  been  deemed  wise  and 
natural,  let  us  not  turn  back. 


BOOK  I. 

WAGES  AND  CAPITAL. 


CHAPTER  I. — THE  CURRENT  DOCTRINE — ITS  INSUF- 
FICIENCY. 

CHAPTER     II. — THE    MEANING    OF   THE   TERMS. 

CHAPTER  III. — WAGES    NOT     DRAWN    FROM     CAPITAL,    BUT 

PRODUCED    BY   THE    LABOR. 

CHAPTER   IV. — THE     MAINTENANCE       OF      LABORERS      NOT 

DRAWN    FROM   CAPITAL. 

CHAPTER     V. — THE   REAL  FUNCTIONS   OF   CAPITAL. 


He  that  is  to  follow  philosophy  must  be  a  freeman  in  mind.  | 

— Ptolemy,       I 


CHAPTER  L 

THE   CURRENT   DOCTRINE   OF  WAGES — ITS  INSUFFICIENCY. 

Eeducing  to  its  most  compact  form  the  problem  we 
have  set  out  to  investigate,  let  us  examine,  step  by  step, 
the  explanation  which  political  economy,  as  now  accepted 
by  the  best  authority,  gives  of  it. 

The  cause  which  produces  poverty  in  the  midst  of  ad- 
vancing wealth  is  evidently  the  cause  which  exhibits  it- 
self in  the  tendency,  everywhere  recognized,  of  wages  to 
a  minimum.  Let  us,  therefore,  put  our  inquiry  into  this 
compact  form: 

Why,  171  spite  of  increase  in  productive  pomer,  do  wages 
tend  to  a  minimum  which  tuill  give  hut  a  hare  living  f 

The  answer  of  the  current  political  economy  is,  that 
wages  are  fixed  by  the  ratio  between  the  number  of 
laborers  and  the  amount  of  capital  devoted  to  the  em- 
ployment of  labor,  and  constantly  tend  to  the  lowest 
amount  on  which  laborers  will  consent  to  live  and  repro- 
duce, because  the  increase  in  the  number  of  laborers 
tends  naturally  to  follow  and  overtake  any  increase  in 
capital.  The  increase  of  the  divisor  being  thus  held  in 
check  only  by  the  possibilities  of  the  quotient,  the  divi- 
dend may  be  increased  to  infinity  without  greater  result. 

In  current  thought  this  doctrine  holds  all  but  undis- 
puted sway.  It  bears  the  indorsement  of  the  very  high- 
est names  among  the  cultivators  of  political  economy, 
and  though  there  have  been  attacks   upon  it,  they  are 


18  WAGES   AXD   CAPITAL.  Book  I. 

generally  more  formal  than  real,*  It  is  assumed  by 
Buckle  as  the  basis  of  his  generalizations  of  universal 
history.  It  is  taught  in  all,  or  nearly  all,  the  great  Eng- 
lish and  American  universities,  and  is  laid  down'  in  text- 
books which  aim  at  leading  the  masses  to  reason  correctly 
upon  practical  aifairs,  while  it  seems  to  harmonize  with 
the  new  philosophy,  which,  having  in  a  few  years  all  but 
conquered  the  scientiific  world,  is  now  rapidly  permeating 
the  general  mind. 

Thus  entrenched  in  the  upper  regions  of  thought,  it  is 
in  cruder  form  even  more  firmly  rooted  in  what  may  be 
styled  the  lower.  What  gives  to  the  fallacies  of  protec- 
tion such  a  tenacious  hold,  in  spite  of  their  evident  in- 
consistencies and  absurdities,  is  the  idea  that  the  sum  to 
be  distributed  in  wages  is  in  each  community  a  fixed  one, 
which  the  competition  of  "foreign  labor"  must  still 
further  subdivide.  The  same  idea  underlies  most  of  the 
theories  which  aim  at  the  abolition  of  interest  and  the 
restriction  of  competition,  as  the  means  whereby  the 
share  of  the  laborer  in  the  general  wealth  can  be  in- 
creased; and  it  crops  out  in  every  direction  among  those 
who  are  not  thoughtful  enough  to  have  any  theories,  as 
may  be  seen  in  the  columns  of  newspapers  and  the 
debates  of  legislative  bodies. 

*  This  seems  to  me  true  of  Mr.  Thornton's  objections,  for  while 
he  denies  the  existence  of  a  predetermined  wage  fund,  consisting  of 
a  portion  of  capital  set  apart  for  the  purchase  of  labor,  he  yet  holds 
(which  is  the  essential  thing)  that  wages  are  drawn  from  capital, 
and  that  increase  or  decrease  of  capital  is  increase  or  decrease  of  the 
fund  available  for  the  payment  of  wages.  The  most  vital  attack 
upon  the  wage  fund  doctrine  of  which  I  know  is  that  of  Professor 
Francis  A.  Walker  (The  Wages  Question:  New  York,  1876),  yet  he 
admits  that  wages  are  in  large  part  advanced  from  capital — which, 
so  far  as  it  goes,  is  all  that  the  stanchest  supporter  of  the  wage 
fund  theory  could  claim — while  he  fully  accepts  the  Malthusian 
theory.  Thus  his  practical  conclusions  in  nowise  differ  from  those 
reached  by  expounders  of  the  current  theory. 


Chap.  I.  THE    CURRENT    DOCTRINE.  19 

And  yet,  widely  accepted  and  deeply  rooted  as  it  is,  it 
seems  to  me  that  this  theory  does  not  tally  with  obvious 
facts.  For,  if  wages  depend  upon  the  ratio  between  the 
amount  of  labor  seeking  employment  and  the  amount  of 
capital  devoted  to  its  employment,  the  relative  scarcity 
or  abundance  of  one  factor  must  mean  the  relative 
abundance  or  scarcity  of  the  other.  Thus,  capital  must 
be  relatively  abundant  where  wages  are  high,  and  rela- 
tively scarce  where  wages  are  low.  Now,  as  the  capital 
used  in  paying  Avages  must  largely  consist  of  the  capital 
constantly  seeking  investment,  the  current  rate  of  inter- 
est must  be  the  measure  of  its  relative  abundance  or  scar- 
city. So,  if  it  be  true  that  wages  depend  upon  the  ratio 
between  the  amount  of  labor  seeking  employment  and 
the  capital  devoted  to  its  employment,  then  high  wages, 
the  mark  of  the  relative  scarcity  of  labor,  must  be  ac- 
comj)anied  by  low  interest,  the  mark  of  the  relative 
abundance  of  capital,  and  reversely,  low  wages  must  be 
accompanied  by  high  interest. 

This  is  not  the  fact,  but  the  contrary.  Eliminating 
from  interest  the  element  of  insurance,  and  regarding 
only  interest  proper,  or  the  return  for  the  use  of  capital, 
is  it  not  a  general  truth  that  interest  is  high  where  and 
when  wages  are  high,  and  low  where  and  when  wages  are 
low?  Both  wages  and  interest  have  been  higher  in  the 
United  States  than  in  England,  in  the  Pacific  than  in 
the  Atlantic  States.  Is  it  not  a  notorious  fact  that  where 
labor  flows  for  higher  wages,  capital  also  flows  for  higher 
interest?  Is  it  not  true  that  wherever  there  has  been  a 
general  rise  or  fall  in  wages  there  has  been  at  the  same 
time  a  similar  rise  or  fall  in  interest?  In  California,  for 
instance,  when  wages  were  higher  than  anywhere  else  in 
the  world,  so  also  was  interest  higher.  Wages  and  inter- 
est have  in  California  gone  down  together.  When  com- 
mon wages  were  $5  a  day,  the  ordinary  bank  rate  of  in- 
terest was  twenty-four  per  cent,  per  annum.     Now  that 


20  WAGES  AND   CAPITAL,  Book  I, 

common  wages  are  $2  or  12.50  a  day,  the  ordinary  bank 
rate  is  from  ten  to  twelve  per  cent. 

NoAV,  this  broad,  general  fact,  that  wages  are  higher  in 
new  countries,  where  capital  is  relatively  scarce,  than  in 
old  countries,  where  capital  is  relatively  abundant,  is  too 
glaring  to  be  ignored.  And  although  very  lightly 
touched  upon,  it  is  noticed  by  the  expounders  of  the  cur- 
rent political  economy.  The  manner  in  which  it  is 
noticed  proves  Avhat  I  say,  that  it  is  utterly  inconsistent 
with  the  accepted  theory  of  wages.  For  in  explaining  it 
such  writers  as  Mill^  Fawcett,  and  Price  virtually  give  up 
the  theory  of  wages  upon  which,  in  the  same  treatises, 
they  formally  insist.  Though  they  declare  that  wages 
are  fixed  by  the  ratio  between  capital  and  laborers,  they 
explain  the  higher  wages  and  interest  of  new  countries 
by  the  greater  relative  production  of  wealth.  I  shall 
hereafter  show  that  this  is  not  the  fact,  but  that,  on  the 
contrary,  the  production  of  wealth  is  relatively  larger  in 
old  and  densely  populated  countries  than  in  new  and 
sparsely  populated  countries.  But  at  present  I  merely 
wish  to  point  out  the  inconsistency.  For  to  say  that  the 
higher  wages  of  new  countries  are  due  to  greater  propor- 
tionate production,  is  clearly  to  make  the  ratio  with  pro- 
duction, and  not  the  ratio  with  capital,  the  determinator 
of  wages. 

Though  this  inconsistency  does  not  seem  to  have  been 
perceived  by  the  class  of  writers  to  whom  I  refer,  it  has 
been  noticed  by  one  of  the  most  logical  of  the  expounders 
of  the  current  political  economy.  Professor  Cairnes* 
endeavors  in  a  very  ingenious  way  to  reconcile  the  fact 
with  the  theory,  by  assuming  that  in  new  countries, 
where  industry  is  generally  directed  to  the  production  of 
food  and  what  in  manufactures  is  called  raw  material,  a 

*  Some  Leading  Principles  of  Political    Economy  Newly    Ex- 
pounded, Chapter  1,  Part  3. 


ClMp.  I.  THE    CURRENT   DOCTRINE.  21 

much  larger  proportion  of  the  capital  used  in  production 
is  devoted  to  the  payment  of  wages  than  in  older  coun- 
tries where  a  greater  part  must  be  expended  in  machinery 
and  material,  and  thus,  in  the  new  country,  though  cap- 
ital is  scarcer,  and  interest  is  higher,  the  amount  deter- 
mined to  the  payment  of  wages  is  really  larger,  and 
wages  are  also  higher.  For  instance,  of  $100,000  devoted 
in  an  old  country  to  manufactures,  $80,000  would  prob- 
ably be  expended  for  buildings,  machinery  and  the  pur- 
chase of  materials,  leaving  but  $20,000  to  be  paid  out  in 
wages;  whereas  in  a  new  country,  of  $30,000  devoted  to 
agriculture,  etc.,  not  more  than  $5,000  would  be  required 
for  tools,  etc.,  leaving  $25,000  to  be  distributed  in  wages. 
In  this  way  it  is  explained  that  the  wage  fund  may  be 
comparatively  large  where  capital  is  comparatively  scarce, 
and  high  wages  and  high  interest  accompany  each  other. 
In  what  follows  I  think  I  shall  be  able  to  show  that 
this  explanation  is  based  upon  a  total  misapprehension 
of  the  relations  of  labor  to  capital — a  fundamental  error 
as  to  the  fund  from  which  wages  are  drawn;  but  at  pres- 
ent it  is  necessary  only  to  point  out  that  the  counection 
in  the  fluctuation  of  wages  and  interest  in  the  same 
countries  and  in  the  same  branches  of  industry  cannot 
thus  be  explained.  In  those  alternations  known  as  "good 
times"  and  "hard  times"  a  brisk  demand  for  labor  and 
good  wages  is  always  accompanied  by  a  brisk  demand  for 
capital  and  stiff  rates  of  interest.  "While,  when  laborers 
cannot  find  employment  and  wages  droop,  there  is  always 
an  accumulation  of  capital  seeking  investment  at  low 
rates.*  The  present  depression  has  been  no  less  marked 
by  want  of  employment  and  distress  among  the  working 
classes  than  by  the  accumulation  of  unemployed  capital 
in  all  the  great  centers,  and  by  nominal  rates  of  interest 


*  Times  of  commercial  panic  are  marked  by  high  rates  of  dis- 
count, but  this  is  evidently  not  a  high  rate  of  interest,  properly  so- 
called,  but  a  high  rate  of  insurance  against  risk. 


32  WAGES  AND  CAPITAL.  Book  I. 

on  undoubted  security.  Thus,  under  conditions  which 
admit  of  no  explanation  consistent  with  the  current 
theory,  do  we  find  high  interest  coinciding  with  high 
wages,  and  low  interest  with  low  wages — capital  seemingly 
scarce  when  labor  is  scarce,  and  abundant  when  labor  is 
abundant. 

All  these  well  known  facts,  which  coincide  with  each 
other,  point  to  a  relation  between  wages  and  interest, 
but  it  is  to  a  relation  of  conjunction,  not  of  opposition. 
Evidently  they  are  utterly  inconsistent  with  the  theory 
that  wages  are  determined  by  the  ratio  between  labor  and 
capital,  or  any  part  of  capital. 

How,  then,  it  will  be  asked,  could  such  a  theory  arise? 
How  is  it  that  it  has  been  accepted  by  a  succession  of 
economists,  from  the  time  of  Adam  Smith  to  the  present 
day? 

If  we  examine  the  reasoning  by  which  in  current 
treatises  this  theory  of  wages  is  supported,  we  see  at  once 
that  it  is  not  an  induction  from  observed  facts,  but  a  de- 
duction from  a  previously  assumed  theory — viz.,  that 
wages  are  drawn  from  capital.  It  being  assumed  that 
capital  is  the  source  of  wages,  it  necessarily  follows  that 
the  gross  amount  of  wages  must  be  limited  by  the 
amount  of  capital  devoted  to  the  employment  of  labor, 
and  hence  that  the  amount  individual  laborers  can  re- 
ceive must  be  determined  by  the  ratio  between  their 
number  and  the  amount  of  capital  existing  for  their  rec- 
ompense.*    This  reasoning  is  valid,  but  the  conclusion, 

*  For  instance  McCullocli  (Note  VI  to  Wealth  of  Nations)  says: 
"That  portion  of  the  capital  or  wealth  of  a  country  which  the  em 
ployers  of  labor  intend  to  or  are  willing  to  pay  out  in  the  purchase 
of  labor,  may  be  much  larger  at  one  time  than  another.  But  what- 
ever may  be  its  absolute  magnitude,  it  obviously  forms  the  only 
source  from  which  any  portion  of  the  wages  of  labor  can  be  derived. 
No  other  fund  is  in  existence  from  which  the  laborer,  as  such,  can 
draw  a  single  shilling.     And  hence  it  follows  that  the  average  rate 


Chap.  I.  THE  CUKRENT  DOCTRINE.  23 

as  we  have  seen,  does  not  correspond  with  the  facts. 
The  fault,  therefore,  must  be  in  the  premises.  Let  us 
see. 

I  am  aware  that  the  theorem  that  wages  are  drawn 
from  capital  is  one  of  the  most  fundamental  and  appar- 
ently best  settled  of  current  political  economy,  and  that 
it  has  been  accepted  as  axiomatic  by  all  the  great  think- 
ers who  have  devoted  their  powers  to  the  elucidation  of 
the  science.  Nevertheless,  I  think  it  can  be  demon- 
strated to  be  a  fundamental  error — the  fruitful  parent  of 
a  long  series  of  errors,  which  vitiate  most  important  prac- 
tical conclusions.  This  demonstration  I  am  about  to 
attempt.  It  is  necessary  that  it  should  be  clear  and  con- 
clusive, for  a  doctrine  upon  which  so  much  important 
reasoning  is  based,  which  is  supported  by  such  a  weight 
of  authority,  which  is  so  plausible  in  itself,  and  is  so  lia- 
ble to  recur  in  different  forms,  cannot  be  safely  brushed 
aside  in  a  paragraph. 

The  proposition  I  shall  endeavor  to  prove,  is: 

That  loages,  instead  ofbeing  drawn  from  capital,  are  in 
reality  drawn  from  the  product  of  the  labor  for  ivMch 
they  are  paid.  * 

Now,  inasmuch  as  the  current  theory  that  wages  are 
drawn  from  capital  also  holds  that  capital  is  reimbursed 
from  production,  this  at  lirst  glance  may  seem  a  distinc- 
tion without  a  difference — a  mere  change  in  terminology, 

of  wages,  or  the  share  of  the  national  capital  appropriated  to  the 
employment  of  labor  falling,  at  an  average,  to  each  laborer,  must 
entirely  depend  on  its  amount  as  compared  with  the  number  of 
those  amongst  whom  it  has  to  be  divided."  Similar  citations  might 
be  made  from  all  the  standard  economists. 

*  We  are  speaking  of  labor  expended  in  production,  to  which  it  is 
best  for  the  sake  of  simplicity  to  confine  the  inquiry.  Any  question 
which  may  arise  in  the  reader's  mind  as  to  wages  for  unproductive 
services  had  best  therefore  be  deferred. 


24  WAGES  AND   CAPITAL.  Book  I. 

to  discuss  which  would  be  but  to  add  to  those  unprofit- 
able disputes  that  render  so  much  that  has  been  written 
upon  politico-economic  subjects  as  barren  and  worthless 
as  the  controversies  of  the  various  learned  societies  about 
the  true  reading  of  the  inscription  on  the  stone  that  Mr. 
Pickwick  found.  But  that  it  is  much  more  than  a 
formal  distinction  will  be  apparent  when  it  is  considered 
that  upon  the  difference  between  the  two  propositions 
are  built  up  all  the  current  theories  as  to  the  relations  of 
capital  and  labor;  that  from  it  are  deduced  doctrines 
that,  themselves  regarded  as  axiomatic,  bound,  direct, 
and  govern  the  ablest  minds  in  the  discussion  of  the  most 
momentous  questions.  For,  upon  the  assumption  that 
wages  are  drawn  directly  from  capital,  and  not  from  the 
product  of  the  labor,  is  based,  not  only  the  doctrine  that 
wages  depend  upon  the  ratio  between  capital  and  labor, 
but  the  doctrine  that  industry  is  limited  by  capital — that 
capital  must  be  accumulated  before  labor  is  employed, 
and  labor  cannot  be  employed  except  as  capital  is  accu- 
mulated; the  doctrine  that  every  increase  of  capital  gives 
or  is  capable  of  giving  additional  employment  to  indus- 
try; the  doctrine  that  the  conversion  of  circulating  cap- 
ital into  fixed  capital  lessens  the  fund  applicable  to  the 
maintenance  of  labor;  the  doctrine  that  more  laborers 
can  be  employed  at  low  than  at  high  Avages;  the  doctrine 
that  capital  applied  to  agriculture  will  maintain  more 
laborers  than  if  applied  to  mauufactures  ;  the  doctrine 
that  profits  are  high  or  low  as  wages  are  low  or  high,  or 
that  they  depend  upon  the  cost  of  the  subsistence  of 
laborers;  together  with  such  paradoxes  as  that  a  demand 
for  commodities  is  not  a  demand  for  labor,  or  that  cer- 
tain commodities  may  be  increased  in  cost  by  a  reduction 
in  wages  or  diminished  in  cost  by  an  increase  in  wages. 

In  short,  all  the  teachings  of  the  current  political 
economy,  in  the  widest  and  most  important  part  of  its 
domain,  are  based  more  or  less  directly  upon  the  assump- 


Chap.  L  THE   CURRENT   DOCTRINE.  25 

tion  that  labor  is  maintained  and  paid  out  of  existing 
capital  before  the  product  which  constitutes  the  ultimate 
object  is  secured.  If  it  be  shown  that  this  is  an  error, 
and  that  on  the  contrary  the  maintenance  and  payment 
of  labor  do  not  even  temporarily  trench  on  caj)ital,  but 
are  directly  drawn  from  the  product  of  the  labor,  then  all 
this  vast  superstructure  is  left  without  support  and  must 
fall.  And  so  likewise  must  fall  the  vulgar  theories  which 
also  have  their  base  in  the  belief  that  the  sum  to  be  dis- 
tributed in  wages  is  a  fixed  one,  the  individual  shares  in 
which  must  necessarily  be  decreased  by  an  increase  in 
the  number  of  laborers. 

The  difference  between  the  current  theory  and  the  one 
I  advance  is,  in  fact,  similar  to  that  between  the  mercan- 
tile theory  of  international  exchanges  and  that  with 
which  Adam  Smith  supplanted  it.  BetAveen  the  theory 
that  commerce  is  the  exchange  of  commodities  for 
money,  and  the  theory  that  it  is  the  exchange  of  commod- 
ities for  commodities,  there  may  seem  no  real  difference 
when  it  is  remembered  that  the  adherents  of  the  mercan- 
tile theory  did  not  assume  that  money  had  any  other  use 
than  as  it  could  be  exchanged  for  commodities.  Yet,  in 
the  practical  application  of  these  two  theories,  there 
arises  all  the  difference  between  rigid  governmental  pro- 
tection and  free  trade. 

If  I  have  said  enough  to  show  the  reader  the  ultimate 
importance  of  the  reasoning  through  wliich  I  am  about 
to  ask  him  to  follow  me,  it  will  not  be  necessary  to 
apologize  in  advance  either  for  simplicity  or  prolixity. 
In  arraigning  a  doctrine  of  such  importance — a  doctrine 
supported  by  such  a  weight  of  authority,  it  is  necessary 
to  be  both  clear  and  thorough. 

Were  it  not  for  this  I  should  be  tempted  to  dismiss 
with  a  sentence  the  assumption  that  wages  are  drawn 
from  capital.  For  all  the  vast  superstructure  which  the 
current  political  economy  builds  upon  this   doctrine   is 


26  WAGES  AND   CAPITAL.  Book  L 

in  truth  based  upon  a  foundation  which  has  been  merely 
taken  for  granted,  without  the  slightest  attempt  to  dis- 
tinguish the  apparent  from  the  real.  Because  wages  are 
generally  paid  in  money,  and  in  many  of  the  operations 
of  production  are  paid  before  the  product  is  fully  com- 
pleted, or  can  be  utilized,  it  is  inferred  that  wages  are 
drawn  from  pre-existing  capital,  and,  therefore,  that  in- 
dustry is  limited  by  capital — that  is  to  say  that  labor  can- 
not be  employed  until  capital  has  been  accumulated,  and 
can  only  be  employed  to  the  extent  that  capital  has  been 
accumulated. 

Yet  in  the  very  treatises  in  which  the  limitation  of  in- 
dustry by  capital  is  laid  down  without  reservation  and 
made  the  basis  for  the  most  important  reasonings  and 
elaborate  theories,  we  are  told  that  capital  is  stored-up 
or  accumulated  labor — "that  part  of  wealth  which  is 
saved  to  assist  future  production."  If  we  substitute  for 
the  word  "capital"  this  definition  of  the  word,  the  propo- 
sition carries  its  own  refutation,  for  that  labor  cannot  be 
employed  until  the  results  of  labor  are  saved  becomes  too 
absurd  for  discussion. 

Should  we,  however,  with  this  reducfio  ad  ahsurdum, 
attempt  to  close  the  argument,  we  should  probably  be 
met  with  the  explanation,  not  that  the  first  laborers  were 
supplied  by  Providence  with  the  capital  necessary  to  set 
them  to  work,  but  that  the  proposition  merely  refers  to  a 
state  of  society  in  which  production  has  become  a  com- 
plex operation. 

But  the  fundamental  truth,  that  in  all  economic  rea- 
soning must  be  firmly  grasped,  and  never  let  go,  is  that 
society  in  its  most  highly  developed  form  is  but  an  elab- 
oration of  society  in  its  rudest  beginnings,  and  that  prin- 
ciples obvious  in  the  simpler  relations  of  men  are  merely 
disguised  and  not  abrogated  or  reversed  by  the  more 
intricate  relations  that  result  from  the  division  of  labor 
and  the  use  of  complex  tools  and  methods.     The  steam 


Chap.  I.  THE   CUERENT    DOCTRINE.  27 

grist  mill,  with  its  complicated  machinery  exhibiting 
every  diversity  of  motion,  is  simply  what  the  rude  stone 
mortar  dug  up  from  an  ancient  river  bed  was  in  its  day 
— an  instrument  for  grinding  corn.  And  every  man 
engaged  in  it,  whether  tossing  wood  into  the  furnace, 
running  the  engine,  dressing  stones,  printing  sacks  or 
keeping  books,  is  really  devoting  his  labor  to  the  same 
purpose  that  the  pre-historic  savage  did  when  he  used 
his  mortar — the  preparation  of  grain  for  human  food. 

And  so,  if  we  reduce  to  their  lowest  terms  all  the  com- 
plex operations  of  modern  production,  we  see  that  each 
individual  who  takes  part  in  this  infinitely  subdivided 
and  intricate  network  of  production  and  exchange  is 
really  doing  what  the  primeval  man  did  when  he  climbed 
the  trees  for  fruit  or  followed  the  receding  tide  for  shell- 
fish— endeavoring  to  obtain  from  nature  by  the  exertion 
of  his  powers  the  satisfaction  of  his  desires.  If  we  keep 
this  firmly  in  mind,  if  we  look  upon  production  as  a 
whole — as  the  co-operation  of  all  embraced  in  any  of  its 
great  groups  to  satisfy  the  various  desires  of  each,  we 
plainly  see  that  the  reward  each  obtains  for  his  exertions 
comes  as  truly  and  as  directly  from  nature  as  the  result 
of  that  exertion,  as  did  that  of  the  first  man. 

To  illustrate:  In  the  simplest  state  of  which  we  can 
conceive,  each  man  digs  his  own  bait  and  catches  his  own 
fish.  The  advantages  of  the  division  of  labor  soon  be- 
come apparent,  and  one  digs  bait  while  the  others  fish. 
Yet  evidently  the  one  who  digs  bait  is  in  reality  doing 
as  much  toward  the  catching  of  fish  as  any  of  those  who 
actually  take  the  fish.  So  when  the  advantages  of  canoes 
are  discovered,  and  instead  of  all  going  a-fishing,  one 
stays  behind  and  makes  and  repairs  canoes,  the  canoe- 
maker  is  in  reality  devoting  his  labor  to  the  taking  of 
fish  as  much  as  the  actual  fishermen,  and  the  fish  Avhich 
he  eats  at  night  when  the  fishermen  come  home  are  as 
truly  the  product  of  his  labor  as  of  theirs.     And  thus 


38  WAGES   AND  CAPITAL.  Book  I. 

when  the  division  of  labor  is  fairly  inaugurated,  and  in- 
stead of  each  attempting  to  satisfy  all  of  his  wants  by 
direct  resort  to  nature,  one  fishes,  another  hunts,  a  third 
picks  berries,  a  fourth  gathers  fruit,  a  fifth  makes  tools, 
a  sixth  builds  huts,  and  a  seventh  prepares  clothing — 
each  one  is  to  the  extent  he  exchanges  the  direct  product 
of  his  own  labor  for  the  direct  product  of  the  labor  of 
others  really  applying  his  own  labor  to  the  production 
of  the  things  he  uses — is  in  effect  satisfying  his  particular 
desires  by  the  exertion  of  his  particular  powers;  that  is 
to  say,  what  he  receives  he  in  reality  produces.  If  he 
digs  roots  and  exchanges  them  for  venison,  he  is  in 
effect  as  truly  the  procurer  of  the  venison  as  though  he 
had  gone  in  chase  of  the  deer  and  left  the  huntsman  to  dig 
his  own  roots.  The  common  expression,  "I  made  so  and 
so,"  signifying  "I  earned  so  and  so,"  or  "I  earned  money 
with  which  I  purchased  so  and  so,"  is,  economically 
speaking,  not  metaphorically  but  literally  true.  Earning 
is  making. 

Now,  if  we  follow  these  principles,  obvious  enough  in 
a  simpler  state  of  society,  through  the  complexities  of 
the  state  we  call  civilized,  we  shall  see  clearly  that  in 
every  case  in  which  labor  is  exchanged  for  commodities, 
production  really  precedes  enjoyment;  that  wages  are 
the  earnings — that  is  to  say,  the  makings  of  labor — not 
the  advances  of  capital,  and  that  the  laborer  who  receives 
his  wages  in  money  (coined  or  printed,  it  may  be,  before 
his  labor  commenced)  really  receives  in  return  for  the 
addition  his  labor  has  made  to  the  general  stock  of 
wealth,  a  draft  upon  that  general  stock,  which  he  may 
utilize  in  any  particular  form  of  wealth  that  will  best 
satisfy  his  desires;  and  that  neither  the  money,  which  is 
but  the  draft,  nor  the  particular  form  of  wealth  which 
he  uses  it  to  call  for,  represents  advances  of  capital  for 
his  maintenance,  but  on  the  contrary  represents  the 
wealth,  or  a  portion  of  the  wealth,  his  labor  has  already 
added  to  the  general  stock. 


Chap.  I.  THE  CUREENT   DOCTRINE.  29 

Keeping  these  principles  in  view  we  see  that  the 
draughtsman,  who,  shut  up  in  some  clingy  office  on  the 
banks  of  the  Thames,  is  drawing  the  plans  for  a  great 
marine  engine,  is  in  reality  devoting  his  labor  to  the  pro- 
duction of  bread  and  meat  as  truly  as  though  he  were 
garnering  the  grain  in  California  or  swinging  a  lariat  on 
a  La  Plata  pampa;  that  he  is  as  truly  making  his  own 
clothing  as  though  he  were  shearing  sheep  in  Australia 
or  weaving  cloth  in  Paisley,  and  just  as  effectually  pro- 
ducing the  claret  he  drinks  at  dinner  as  though  he 
gathered  the  grapes  on  the  banks  of  the  Garonne.  The 
miner  who,  two  thousand  feet  under  ground  in  the  heart 
of  the  Comstock,  is  digging  out  silver  ore,  is,  in  effect, 
by  virtue  of  a  thousand  exchanges,  harvesting  crops  in 
valleys  five  thousand  feet  nearer  the  earth's  center;  chas- 
ing the  whale  through  Arctic  icefields;  plucking  tobacco 
leaves  in  Virginia;  picking  coffee  berries  in  Honduras; 
cutting  sugar  cane  on  the  Hawaiian  Islands;  gathering 
cotton  in  Georgia  or  Aveaving  it  in  Manchester  or  Lowell; 
making  quaint  wooden  toys  for  his  children  in  the 
Hartz  Mountains;  or  plucking  amid  the  green  and  gold 
of  Los  Angeles  orchards  the  oranges  which,  when  his 
shift  is  relieved,  he  will  take  home  to  his  sick  wife.  The 
wages  which  he  receives  on  Saturday  night  at  the  mouth 
of  the  shaft,  what  are  they  but  the  certificate  to  all  the 
world  that  he  has  done  these  things — the  primary  ex- 
change in  the  long  series  which  transmutes  his  labor  into 
the  things  he  has  really  been  laboring  for? 

All  this  is  clear  when  looked  at  in  this  way;  but  to 
meet  this  fallacy  in  all  its  strongholds  and  lurking  places 
we  must  change  our  investigation  from  the  deductive  to 
the  inductive  form.  Let  us  now  see,  if,  beginning  with 
facts  and  tracing  their  relations,  we  arrive  at  the  same 
conclusions  as  are  thus  obvious  when,  beginning  with 
first  principles,  we  trace  their  exemplification  in  complex 
facts. 


CHAPTER  II, 

THE  MEANING   OF  THE  TERMS. 

Before  proceeding  further  in  our  inquiry,  let  us  make 
sure  of  the  meaning  of  our  terms,  for  indistinctness  in 
their  use  must  inevitably  produce  ambiguity  and  inde- 
terminateness  in  reasoning.  Not  only  is  it  requisite  in 
economic  reasoning  to  give  to  such  words  as  "wealth," 
^'capital,"  ''rent,"  ''wages,"  and  the  like,  a  much  more 
definite  sense  than  they  bear  in  common  discourse,  but, 
unfortunately,  even  in  political  economy  there  is,  as  to 
some  of  these  terms,  no  certain  meaning  assigned  by 
common  consent,  different  writers  giving  to  the  same 
term  different  meanings,  and  the  same  writers  often 
using  a  term  in  different  senses.  Nothing  can  add  to  the 
force  of  what  has  been  said  by  so  many  eminent  authors 
as  to  the  importance  of  clear  and  precise  definitions,  save 
the  example,  not  an  infrequent  one,  of  the  same  authors 
falling  into  grave  errors  from  the  very  cause  they  warned 
against.  And  nothing  so  shows  the  importance  of  lan- 
guage in  thought  as  the  spectacle  of  even  acute  thinkers 
basing  important  conclusions  upon  the  use  of  the  same 
word  in  varying  senses.  I  shall  endeavor  to  avoid  these 
dangers.  It  will  be  my  effort  throughout,  as  any  term 
becomes  of  importance,  to  state  clearly  what  I  mean  by 
it,  and  to  use  it  in  that  sense  and  in  no  other.  Let  me 
ask  the  reader  to  note  and  to  bear  in  mind  the  definitions 
thus  given,  as  otherAvise  I  cannot  hope  to  make  myself 
properly  understood.  I  shall  not  attempt  to  attach 
arbitrary  meanings  to  words,  or  to  coin  terms,  even  when 


Chap.  II.  THE    MEANING    OF   THE   TERMS.  31 

it  would  be  convenient  to  do  so,  but  shall  conform  to 
usage  as  closely  as  is  possible,  only  endeavoring  so  to  lix 
the  meaning  of  words  that  they  may  clearly  express 
thought. 

What  we  have  now  on  hand  is  to  discover  whether,  as  a 
matter  of  fact,  wages  are  drawn  from  capital.  As  a  pre- 
liminary, let  us  settle  what  we  mean  by  wages  and  what 
we  mean  by  capital.  To  the  former  word  a  sufficiently 
definite  meaning  has  been  given  by  economic  writers,  but 
the  ambiguities  which  have  attached  to  the  use  of  the 
latter  in  political  economy  will  require  a  detailed  exami- 
nation. 

As  used  in  common  discourse  "wages"  means  a  com- 
pensation paid  to  a  hired  person  for  his  services;  and  we 
speak  of  one  man  "working  for  wages,"  in  contradistinc- 
tion to  another  who  is  "working  for  himself."  The  use 
of  the  term  is  still  further  narrowed  by  the  habit  of  ap- 
plying it  solely  to  compensation  paid  for  manual  labor. 
AVe  do  not  speak  of  the  wages  of  professional  men,  man- 
agers or  clerks,  but  of  their  fees,  commissions,  or  sala- 
ries. Thus  the  common  meaning  of  the  word  wages  is 
the  compensation  paid  to  a  hired  person  for  manual 
labor.  But  in  political  economy  the  word  wages  has  a 
much  wider  meaning,  and  includes  all  returns  for  exer- 
tion. For,  as  political  economists  explain,  the  three 
agents  or  factors  in  production  are  land,  labor,  and  capi- 
tal, and  that  part  of  the  produce  which  goes  to  the  sec- 
ond of  these  factors  is  by  them  styled  wages. 

Thus  the  term  labor  includes  all  human  exertion  in 
the  production  of  wealth,  and  wages,  being  that  part  of 
the  produce  which  goes  to  labor,  includes  all  reward  for 
such  exertion.  There  is,  therefore,  in  the  politico-eco- 
nomic sense  of  the  term  wages  no  distinction  as  to  the 
kind  of  labor,  or  as  to  whether  its  reward  is  received 
through  an  employer  or  not,  but  wages  means  the  return 
received  for  the  exertion  of  labor,  as  distinguished  from 


32  WAGES  AND   CAPITAL.  Boohl. 

the  return  received  for  the  use  of  capital,  and  the  return 
received  by  the  landholder  for  the  use  of  land.  The  man 
who  cultivates  the  soil  for  himself  receives  his  wages  in 
its  produce,  just  as,  if  he  uses  his  own  capital  and  owns 
his  own  land,  he  may  also  receive  interest  and  rent;  the 
hunter's  wages  are  the  game  he  kills;  the  fisherman's 
wages  are  the  fish  he  takes.  The  gold  washed  out  by  the 
self-employing  gold-digger  is  as  much  his  wages  as  the 
money  paid  to  the  hired  coal  miner  by  the  purchaser  of 
his  labor,*  and,  as  Adam  Smith  shows,  the  high  profits 
of  retail  storekeepers  are  in  large  part  wages,  being  the 
recompense  of  their  labor  and  not  of  their  capital.  In 
short,  whatever  is  received  as  the  result  or  reward  of  ex- 
ertion is  "wages." 

This  is  all  it  is  now  necessary  to  note  as  to  "wages," 
but  it  is  important  to  keep  this  in  mind.  For  in  the 
standard  economic  works  this  sense  of  the  term  wages  is 
recognized  with  greater  or  less  clearness  only  to  be  sub- 
sequently ignored. 

But  it  is  more  difficult  to  clear  away  from  the  idea  of 
capital  the  ambiguities  that  beset  it,  and  to  fix  the 
scientific  use  of  the  term.  In  general  discourse,  all  sorts 
of  things  that  have  a  value  or  will  yield  a  return  are 
vaguely  spoken  of  as  capital,  while  economic  writers  vary 
so  widely  that  the  term  can  hardly  be  said  to  have  a  fixed 
meaning.  Let  us  compare  with  each  other  the  defini- 
tions of  a  few  representative  writers: 

"That  part  of  a  man's  stock,"  says  Adam  Smith  (Book 
II,  Chap.  I),  "which  he  expects  to  afford  him  a  revenue, 
is  called  his  capital,"  and  the  capital  of  a  country  or 
society,  he  goes  on  to  say,  consists  of  (1)  machines  and 
instruments  of  trade  which  facilitate  and  abridge  labor; 

*  This  was  recognized  in  common  speech  in  California,  where  the 
placer  miners  styled  their  earnings  their  "wages,"  and  spoke  of 
making  high  wages  or  low  wages  according  to  the  amount  of  gold 
taken  out. 


Ckap.n.  THE   MEANING    OF   THE   TERMS.  33 

(2)  buildings,  not  mere  dwellings,  but  which  may  be  con- 
sidered instruments  of  trade — such  as  shops,  farmhouses, 
etc.;  (3)  improvements  of  land  which  better  fit  it  for 
tillage  or  culture;  (4)  the  acquired  and  useful  abilities 
of  all  the  inhabitants;  (5)  money;  (6)  provisions  in  the 
hands  of  producers  and  dealers,  from  the  sale  of  which 
they  expect  to  derive  a  profit;  (7)  the  material  of,  or 
partially  completed,  manufactured  articles  still  in  the 
hands  of  producers  or  dealers;  (8)  completed  articles 
still  in  the  hands  of  producers  or  dealers.  The  first  four 
of  these  he  styles  fixed  capital,  and  the  last  four  circulat- 
ing capital,  a  distinction  of  which  it  is  not  necessary  to 
our  purpose  to  take  any  note. 
Kicardo's  definition  is: 

"  Capital  is  that  part  of  the  wealth  of  a  country  which  is  em- 
ployed in  production,  and  consists  of  food,  clothing,  tools,  raw 
materials,  machinery,  etc.,  necessary  to  give  effect  to  labor." — 
Principles  of  Political  Economy/,  Chapter  V. 

This  definition,  it  will  be  seen,  is  very  different  from 
that  of  Adam  Smith,  as  it  excludes  many  of  the  things 
which  he  includes — as  acquired  talents,  articles  of  mere 
taste  or  luxury  in  the  possession  of  producers  or  dealers; 
and  includes  some  things  he  excludes — •such  as  food, 
clothing,  etc.,  in  the  possession  of  the  consumer. 

McCulloch's  definition  is: 

"  The  capital  of  a  nation  really  comprises  all  those  portions  of  the 
produce  of  industry  existing  in  it  that  may  be  directly  employed 
either  to  support  human  existence  or  to  facilitate  production." — 
Notes  on  Wealth  of  Nations,  Book  II,  Chap.  I. 

This  definition  follows  the  line  of  Eicardo's,  but  is 
wider.  While  it  excludes  everything  that  is  not  capable 
of  aiding  production,  it  includes  everything  that  is  so 
capable,  without  reference  to  actual  use  or  necessity  for 
use — the  horse  drawing  a  pleasure  carriage  being,  accord- 
ing to  McCulloch's  view,  as  he  expressly  states,  as  much 


34  WAGES  AISTD   CAPITAL.  Book  I. 

capital  as  the  horse  drawing  a  plow,  because  he  may,  if 
need  arises,  be  used  to  draw  a  plow. 

John  Stuart  Mill,  following  the  same  general  line  as 
Eicardo  and  McCulloch,  makes  neither  the  use  nor  the 
capability  of  use,  but  the  determination  to  use,  the  test 
of  capital.     He  says: 

"  Whatever  things  are  destined  to  supply  productive  labor  with 
the  shelter,  protection,  tools  and  materials  which  the  work  requires, 
and  to  feed  and  otherwise  maintain  the  laborer  during  the  process, 
are  capital." — Principles  of  Political  Economy,  Book  I,  Chap.  IV. 

These  quotations  sufficiently  illustrate  the  divergence 
of  the  masters.  Among  minor  authors  the  variance  is 
still  greater,  as  a  few  examples  will  suffice  to  show. 

Professor  Wayland,  whose  "Elements  of  Political 
Economy"  has  long  been  a  favorite  text-book  in  Amer- 
ican educational  institutions,  where  there  has  been  any 
pretense  of  teaching  political  economy,  gives  this  lucid 
definition: 

"  The  word  capital  is  used  in  two  senses.  In  relation  to  product 
it  means  any  substance  on  which  industry  is  to  be  exerted.  In  re- 
lation to  industry,  the  material  on  which  industry  is  about  to  confer 
value,  that  on  which  it  has  conferred  value;  the  instruments  which 
are  used  for  the  conferring  of  value,  as  well  as  the  means  of  suste- 
nance by  which  the  being  is  supported  while  he  is  engaged  in  per- 
forming the  operation." — Elements  of  Political  Economy,  Book  I, 
Chap.  I. 

Henry  0.  Carey,  the  American  apostle  of  protection- 
ism, defines  capital  as  "the  instrument  by  which  man 
obtains  mastery  over  nature,  including  in  it  the  physical 
and  mental  powers  of  man  himself."  Professor  Perry,  a 
Massachusetts  free  trader,  very  properly  objects  to  this 
that  it  hopelessly  confuses  the  boundaries  between  capi- 
tal and  labor,  and  then  himself  hopelessly  confuses  the 
boundaries  between  capital  and  land  by  defining  capital 
as  "any  valuable  thing  outside  of  man  himself  from 
whose  use  springs  a  pecuniary   increase  or  profit."    An 


Chap.n.  THE  MEANING  OF  THE  TEKMS.  35 

English  economic  writer  of  high  standing,  Mr.  Wm. 
Thornton,  begins  an  elaborate  examination  of  the  rela- 
tions of  labor  and  capital  ("On  Labor")  by  stating  that 
he  will  include  land  with  capital,  which  is  very  much  as 
if  one  who  proposed  to  teach  algebra  should  begin  with 
the  declaration  that  he  would  consider  the  signs  plus  and 
minus  as  meaning  the  same  thing  and  having  the  same 
value.  An  American  writer,  also  of  high  standing.  Pro- 
fessor Francis  A.  Walker,  makes  the  same  declaration  in 
his  elaborate  book  on  "The  Wages  Question."  Another 
English  writer,  N.  A.  Nicholson  ("The  Science  of  Ex- 
changes," London,  1873),  seems  to  cap  the  climax  of 
absurdity  by  declaring  in  one  paragraph  (p.  26)  that 
"capital  must  of  course  be  accumulated  by  saving,"  and 
in  the  very  next  paragraph  stating  that  "the  land  which 
produces  a  crop,  the  plow  which  turns  the  soil,  the  labor 
which  secures  the  produce,  and  the  produce  itself,  if  a 
material  profit  is  to  be  derived  from  its  employment,  are  all 
alike  capital."  But  how  land  and  labor  are  to  be  accu- 
mulated by  saving  them  he  nowhere  condescends  to  ex- 
plain. In  the  same  way  a  standard  American  writer. 
Professor  Amasa  Walker  (p.  66,  "Science  of  Wealth"), 
first  declares  that  capital  arises  from  the  net  savings  of 
labor  and  then  immediately  afterward  declares  that  land 
is  capital. 

I  might  go  on  for  pages,  citing  contradictory  and  self- 
contradictory  definitions.  But  it  would  only  weary  the 
reader.  It  is  unnecessary  to  multiply  quotations.  Those 
already  given  are  sufficient  to  show  how  wide  a  difference 
exists  as  to  the  comprehension  of  the  term  capital.  Any 
one  who  wants  further  illustration  of  the  "confusion 
worse  confounded"  which  exists  on  this  subject  among 
the  professors  of  political  economy  may  find  it  in  any 
library  where  the  works  of  these  professors  are  ranged 
side  by  side. 

Now,  it  makes  little  difference  what  name  we  give  to 


36  WAGES  AND  CAPITAL.  Book  I. 

things,  if  when  we  use  the  name  we  always  keep  in  view 
the  same  things  and  no  others.  But  the  difficulty  arising 
in  economic  reasoning  from  these  vague  and  varying 
definitions  of  capital  is  that  it  is  only  in  the  premises  of 
reasoning  that  the  term  is  used  in  the  peculiar  sense  as- 
signed by  the  definition,  while  in  the  practical  conclusions 
that  are  reached  it  is  always  used,  or  at  least  it  is  always 
understood,  in  one  general  and  definite  sense.  When, 
for  instance,  it  is  said  that  wages  are  drawn  from  capital, 
the  word  capital  is  understood  in  the  same  sense  as  when 
we  speak  of  the  scarcity  or  abundance,  the  increase  or 
decrease,  the  destruction  or  increment,  of  capital — a  com- 
monly understood  and  definite  sense  which  separates 
capital  from  the  other  factors  of  production,  land  and 
labor,  and  also  separates  it  from  like  things  used  merely 
for  gratification.  In  fact,  most  people  understand  well 
enough  what  capital  is  until  they  begin  to  define  it,  and 
I  think  their  works  will  show  that  the  economic  writers 
who  differ  so  widely  in  their  definitions  use  the  term  in 
this  commonly  understood  sense  in  all  cases  except  in 
their  definitions  and  the  reasoning  based  on  them. 

This  common  sense  of  the  term  is  that  of  wealth  de- 
voted to  procuring  more  wealth.  Dr.  Adam  Smith  cor- 
rectly expresses  this  common  idea  when  he  says:  "That 
part  of  a  man's  stock  which  he  expects  to  afford  him 
revenue  is  called  his  capital."  And  the  capital  of  a 
community  is  evidently  the  sum  of  such  individual 
stocks,  or  that  part  of  the  aggregate  stock  which  is  ex- 
pected to  procure  more  wealth.  This  also  is  the  deriva- 
tive sense  of  the  term.  The  word  capital,  as  philologists 
trace  it,  comes  down  to  us  from  a  time  when  wealth  was 
estimated  in  cattle,  and  a  man's  income  depended  upon 
the  number  of  head  he  could  keep  for  their  increase. 

The  difficulties  which  beset  the  use  of  the  word  capi- 
tal, as  an  exact  term,  and  which  are  even  more  strikingly 
exemplified  in  current  political   and   social  discussions 


Chap.  II.  THE   MEANING    OF   THE   TERMS.  37 

than  in  the  definitions  of  economic  writers,  arise  from 
two  facts — first,  that  certain  chisses  of  things,  the  pos- 
session of  which  to  the  individual  is  precisely  equivalent 
to  the  possession  of  capital,  are  not  part  of  the  capital  of 
the  community;  and,  second,  that  things  of  the  same 
kind  may  or  may  not  be  capital,  according  to  the  pur- 
pose to  which  they  are  devoted. 

"With  a  little  care  as  to  these  points,  there  should  be 
no  difficulty  in  obtaining  a  sufficiently  clear  and  fixed 
idea  of  what  the  term  capital  as  generally  used  properly 
includes;  such  an  idea  as  will  enable  us  to  say  what 
things  are  capital  and  what  are  not,  and  to  use  the  word 
without  ambiguity  or  slip. 

Land,  labor,  and  capital  are  the  three  factors  of  pro- 
duction. If  we  remember  that  capital  is  thus  a  term  used 
in  contradistinction  to  land  and  labor,  we  at  once  see 
that  nothing  properly  included  under  either  one  of  these 
terms  can  be  properly  classed  as  capital.  The  term  land 
necessarily  includes,  not  merely  the  surface  of  the  earth 
as  distinguished  from  the  water  and  the  air,  but  the 
whole  material  universe  outside  of  man  himself,  for  it  is 
only  by  having  access  to  land,  from  which  his  very  body 
is  drawn,  that  man  can  come  in  contact  with  or  use 
nature.  The  term  land  embraces,  in  short,  all  natural 
materials,  forces,  and  opportunities,  and,  therefore, 
nothing  that  is  freely  supplied  by  nature  can  be  properly 
classed  as  capital.  A  fertile  field,  a  rich  vein  of  ore,  a  fall- 
ing stream  which  supplies  power,  may  give  to  the  possessor 
advantages  equivalent  to  the  possession  of  capital,  but  to 
class  such  things  as  capital  would  be  to  put  an  end  to  the 
distinction  between  land  and  capital,  and,  so  far  as  they 
relate  to  each  other,  to  make  the  two  terms  meaningless. 
The  term  labor,  in  like  manner,  includes  all  human 
exertion,  and  hence  human  powers  whether  natural  or 
acquired  can  never  properly  be  classed  as  capital.  In 
common   parlance  we  often  speak  of  a  man's  knowledge. 


38  '  WAGES   AND   CAPITAL.  Book  I. 

skill,  or  industry  as  constituting  his  capital;  but  this  is 
evidently  a  metaphorical  use  of  language  that  must  be 
eschewed  in  reasoning  that  aims  at  exactness.  Superi- 
ority in  such  qualities  may  augment  the  income  of  an 
individual  just  as  capital  would,  and  an  increase  in  the 
knowledge,  skill,  or  industry  of  a  community  may  have 
the  same  effect  in  increasing  its  production  as  would  an 
increase  of  capital;  but  this  effect  is  due  to  the  increased 
power  of  labor  and  not  to  capital.  Increased  velocity 
may  give  to  the  impact  of  a  cannon  ball  the  same  effect 
as  increased  weight,  yet,  nevertheless,  weight  is  one 
thing  and  velocity  another. 

Thus  we  must  exclude  from  the  category  of  capital 
everything  that  may  be  included  either  as  land  or  labor. 
Doing  so,  there  remain  only  things  which  are  neither 
land  nor  labor,  but  which  have  resulted  from  the  union 
of  these  two  original  factors  of  production.  Nothing 
can  be  properly  capital  that  does  not  consist  of  these — 
that  is  to  say,  nothing  can  be  capital  that  is  not  wealth. 

But  it  is  from  ambiguities  in  the  use  of  this  inclusive 
term  wealth  that  many  of  the  ambiguities  which  beset 
the  term  capital  are  derived. 

As  commonly  used  the  word  "wealth"  is  applied  to 
anything  having  an  exchange  value.  But  when  used  as  a 
term  of  political  economy  it  must  be  limited  to  a  much 
more  definite  meaning,  because  many  things  are  commonly 
spoken  of  as  wealth  which  in  taking  account  of  collective 
or  general  wealth  cannot  be  considered  as  wealth  at  all. 
Such  things  have  an  exchange  value,  and  are  commonly 
spoken  of  as  wealth,  insomuch  as  they  represent  as  be- 
tween individuals,  or  between  sets  of  individuals,  the 
power  of  obtaining  wealth;  but  they  are  not  truly  wealth, 
inasmuch  as  their  increase  or  decrease  does  not  affect  the 
sum  of  wealth.  Such  are  bonds,  mortgages,  promissory 
notes,  bank  bills,  or  other  stipulations  for  the  transfer  of 
wealth.     Such  are  slaves,  whose  value  represents  merely 


Chap.  II.  THE   MEANING   OF   THE  TERMS.  39 

the  power  of  one  class  to  appropriate  the  earnings  of 
another  class.  Such  are  lands,  or  other  natural  oppor- 
tunities, the  value  of  which  is  but  the  result  of  the  ac- 
knowledgment in  favor  of  certain  persons  of  an  exclusive 
right  to  their  use,  and  which  represents  merely  the 
power  thus  given  to  the  owners  to  demand  a  share  of  the 
wealth  produced  by  those  who  use  them.  Increase  in 
the  amount  of  bonds,  mortgages,  notes,  or  bank  bills 
cannot  increase  the  wealth  of  the  community  that  in- 
cludes as  well  those  who  promise  to  pay  as  those  who  are 
entitled  to  receive.  The  enslavement  of  a  part  of  their 
number  could  not  increase  the  wealth  of  a  people,  for 
what  the  enslavers  gained  the  enslaved  would  lose.  In- 
crease in  land  values  does  not  represent  increase  in  the 
common  wealth,  for  what  land  owners  gain  by  higher 
prices,  the  tenants  or  purchasers  who  must  pay  them 
will  lose.  And  all  this  relative  wealth,  which,  in  com- 
mon thought  and  speech,  in  legislation  and  law,  is  un- 
distinguished from  actual  wealth,  could,  without  the 
destruction  or  consumption  of  anything  more  than  a  few 
drops  of  ink  and  a  piece  of  paper,  be  utterly  annihilated. 
By  enactment  of  the  sovereign  political  poAver  debts 
might  be  canceled,  slaves  emancipated,  and  land  resumed 
as  the  common  property  of  the  whole  people,  without  the 
aggregate  wealth  being  diminished  by  the  value  of  a 
pinch  of  snuff,  for  what  some  would  lose  others  would 
gain.  There  would  be  no  more  destruction  of  wealth 
than  there  was  creation  of  wealth  when  Elizabeth  Tudor 
enriched  her  favorite  courtiers  by  the  grant  of  mo- 
nopolies, or  when  Boris  Godoonof  made  Kussian  peasants 
merchantable  property. 

All  things  which  have  an  exchange  value  are,  therefore, 
not  wealth,  in  the  only  sense  in  which  the  term  can  be 
used  in  political  economy.  Only  such  things  can  be 
wealth  the  production  of  which  increases  and  the  destruc- 
tion of  which  decreases  the  aggregate  of  wealth.     If  we 


40  WAGES  AND   CAPITAL.  Book  I 

consider  what  these  things  are,  and  what  their  nature  is, 
we  shall  have  no  difficulty  in  defining  wealth. 

When  we  speak  of  a  community  increasing  in  wealth 
— as  when  we  say  that  England  has  increased  in  wealth 
since  the  accession  of  Victoria,  or  that  California  is  a 
wealthier  country  than  when  it  was  a  Mexican  territory 
— we  do  not  mean  to  say  that  there  is  more  land,  or  that 
the  natural  powers  of  the  land  are  greater,  or  that  there 
are  more  people,  for  when  we  wish  to  express  that  idea 
we  speak  of  increase  of  population;  or  that  the  debts  or 
dues  owing  by  some  of  these  people  to  others  of  their 
number  have  increased;  but  we  mean  that  there  is  an  in- 
crease of  certain  tangible  things,  having  an  actual  and 
not  merely  a  relative  value — such  as  buildings,  cattle, 
tools,  machinery,  agricultural  and  mineral  products, 
manufactured  goods,  ships,  wagons,  furniture,  and  the 
like.  The  increase  of  such  things  constitutes  an  increase 
of  wealth;  their  decrease  is  a  lessening  of  wealth;  and 
the  community  that,  in  proportion  to  its  numbers,  has 
most  of  such  things  is  the  wealthiest  community.  The 
common  character  of  these  things  is  that  they  consist  of 
natural  substances  or  products  which  have  been  adapted 
by  human  labor  to  human  use  or  gratification,  their  value 
depending  on  the  amount  of  labor  which  upon  the  aver- 
age would  be  required  to  produce  things  of  like  kind. 

Thus  wealth,  as  alone  the  term  can  be  used  in  political 
economy,  consists  of  natural  products  that  have  been  se- 
cured, moved,  combined,  separated,  or  in  other  ways 
modified  by  human  exertion,  so  as  to  fit  them  for  the 
gratification  of  human  desires.  It  is,  in  other  words, 
labor  impressed  upon  matter  in  such  a  way  as  to  store 
up,  as  the  heat  of  the  sun  is  stored  up  in  coal,  the  power 
of  human  labor  to  minister  to  human  desires.  Wealth  is 
not  the  sole  object  of  labor,  for  labor  is  also  expended  in 
ministering  directly  to  desire;  but  it  is  the  object  and 
result  of  what  we  call  productive   labor — that  is,  labor 


Chap.  II.  THE   MEANING    OF   THE   TERMS.  41 

which  gives  value  to  material  things.  Nothing  which 
nature  supplies  to  man  without  his  labor  is  wealth,  nor 
yet  does  the  expenditure  of  labor  result  in  wealth  unless 
there  is  a  tangible  product  which  has  and  retains  the 
power  of  ministering  to  desire. 

Now,  as  capital  is  wealth  devoted  to  a  certain  purpose, 
nothing  can  be  capital  which  does  not  fall  within  this 
definition  of  wealth.  By  recognizing  and  keeping  this 
in  mind,  we  get  rid  of  misconceptions  which  vitiate  all 
reasoning  in  which  they  are  permitted,  which  befog  pop- 
ular thought,  and  have  led  into  mazes  of  contradiction 
even  acute  thinkers. 

But  though  all  capital  is  wealth,  all  wealth  is  not  capi- 
tal. Capital  is  only  a  part  of  wealth — 'that  part,  namely, 
which  is  devoted  to  the  aid  of  production.  It  is  in  draw- 
ing this  line  between  the  wealth  that  is  and  the  wealth 
that  is  not  capital  that  a  second  class  of  misconceptions 
are  likely  to  occur. 

The  errors  which  I  have  been  pointing  out,  and  which 
consist  in  confounding  with  wealth  and  capital  things 
essentially  distinct,  or  which  have  but  a  relative  exist- 
ence, are  now  merely  vulgar  errors.  They  are  wide- 
spread, it  is  true,  and  have  a  deep  root,  being  held,  not 
merely  by  the  less  educated  classes,  but  seemingly  by  a 
large  majority  of  those  who  in  such  advanced  countries 
as  England  and  the  United  States  mold  and  guide  public 
opinion,  make  the  laws  in  Parliaments,  Congresses  and 
Legislatures,  and  administer  them  in  the  courts.  They 
crop  out,  moreover,  in  the  disquisitions  of  many  of  those 
flabby  writers  who  have  burdened  the  press  and  dark- 
ened counsel  by  numerous  volumes  which  are  dubbed 
political  economy,  and  which  pass  as  text-books  with  the 
ignorant  and  as  authority  with  those  who  do  not  think 
for  themselves.  Neverthless,  they  are  only  vulgar  errors, 
inasmuch  as  they  receive  no  countenance  from  the  best 
writers  on  political  economy.     By  one  of  those  lapses 


43  WAGES  AND   CAPITAL.  Book  I. 

which  flaw  his  great  work  and  strikingly  evince  the  im- 
perfections of  the  highest  talent,  Adam  Smith  counts  as 
capital  certain  personal  qualities,  an  inclusion  which  is 
not  consistent  with  his  original  definition  of  capital  as 
stock  from  which  revenue  is  expected.  But  this  error 
has  been  avoided  by  his  most  eminent  successors,  and  in  ' 
the  definitions,  previously  given,  of  Eicardo,  McCulloch, 
and  Mill,  it  is  not  involved.  Neither  in  their  defini- 
tions nor  in  that  of  Smith  is  involved  the  vulgar  error 
which  confounds  as  real  capital  things  which  are  only  rela- 
tively capital,  such  as  evidences  of  debt,  land  values,  etc. 
But  as  to  things  which  are  really  wealth,  their  definitions 
differ  from  each  other,  and  widely  from  that  of  Smith, 
as  to  what  is  and  what  is  not  to  be  considered  as  capital. 
The  stock  of  a  jeweler  would,  for  instance,  be  included 
as  capital  by  the  definition  of  Smith,  and  the  food  or 
clothing  in  possession  of  a  laborer  would  be  excluded. 
But  the  definitions  of  Eicardo  and  McCulloch  would  ex- 
clude the  stock  of  the  jeweler,  as  would  also  that  of  Mill, 
if  understood  as  most  persons  would  understand  the 
words  I  have  quoted.  But  as  explained  by  him,  it  is 
neither  the  nature  nor  the  destination  of  the  things 
themselves  which  determines  whether  they  are  or  are  not 
capital,  but  the  intention  of  the  owner  to  devote  either 
the  things  or  the  value  received  from  their  sale  to  the 
supply  of  productive  labor  with  tools,  materials,  and 
maintenance.  All  these  definitions,  however,  agree  in 
including  as  capital  the  provisions  and  clothing  of  the 
laborer,  which  Smith  excludes. 

Let  us  consider  these  three  definitions,  which  repre- 
sent the  best  teachings  of  current  political  economy: 

To  McCulloch's  definition  of  capital  as  "all  those  por- 
tions of  the  produce  of  industry  that  may  be  directly 
employed  either  to  support  human  existence  or  to  facil- 
itate production,"  there  are  obvious  objections.  One 
may  pass  along  any  principal  street  in  a  thriving  town 


Chap.  II.  THE  MEANING   OF  THE  TERMS.  43 

or  city  and  see  stores  filled  with  all  sorts  of  valuable 
things,  which,  though  they  cannot  be  employed  either 
to  support  human  existence  or  to  facilitate  production, 
undoubtedly  constitute  part  of  the  capital  of  the  store- 
keepers and  part  of  the  capital  of  the  community.  And 
he  can  also  see  products  of  industry  capable  of  support- 
ing human  existence  or  facilitating  production  being 
consumed  in  ostentation  or  useless  luxury.  Surely  these, 
though  they  might,  do  not  constitute  part  of  capital. 

Eicardo's  definition  avoids  including  as  capital  things 
which  might  be  but  are  not  employed  in  production,  by 
covering  only  such  as  are  employed.  But  it  is  open  to 
the  first  objection  made  to  McCulloch's.  If  only  wealth 
that  may  be,  or  that  is,  or  that  is  destined  to  be,  used  in 
supporting  producers,  or  assisting  production,  is  cajDital, 
then  the  stocks  of  jewelers,  toy  dealers,  tobacconists, 
confectioners,  picture  dealers,  etc. — in  fact,  all  stocks 
that  consist  of,  and  all  stocks  in  so  far  as  they  consist  of 
articles  of  luxury,  are  not  capital. 

If  Mill,  by  remitting  the  distinction  to  the  mind  of  the 
capitalist,  avoids  this  difficulty  (which  does  not  seem  to 
me  clear),  it  is  by  making  the  distinction  so  vague  that 
no  power  short  of  omnisicence  could  tell  in  any  given 
country  at  any  given  time  what  was  and  what  was  not 
capital. 

But  the  great  defect  which  these  definitions  have  in 
common  is  that  they  include  what  clearly  cannot  be  ac- 
counted capital,  if  any  distinction  is  to  be  made  between 
laborer  and  capitalist.  For  they  bring  into  the  category 
of  capital  the  food,  clothing,  etc.,  in  the  possession  of 
the  day  laborer,  which  he  will  consume  whether  he 
works  or  not,  as  well  as  the  stock  in  the  hands  of  the 
capitalist,  with  which  he  proposes  to  pay  the  laborer  for 
his  work. 

Yet,  manifestly,  this  is  not  the  sense  in  which  the 
term  capital  is  used  by  these  writers  when  they  speak  of 


44  WAGES  AND   CAPITAL.  Book  I. 

labor  and  caj^ital  as  taking  separate  parts  in  the  work  of 
production  and  separate  shares  in  the  distribution  of  its 
proceeds;  when  they  speak  of  wages  as  drawn  from  capi- 
tal, or  as  depending  upon  the  ratio  between  labor  and 
capital,  or  in  any  of  the  ways  in  which  the  term  is  gen- 
erally used  by  them.  In  all  these  cases  the  term  capital 
is  used  in  its  commonly  understood  sense,  as  that  portion 
of  wealth  Avhich  its  owners  do  not  propose  to  use  directly 
for  their  own  gratification,  but  for  the  purpose  of  obtain- 
ing more  wealth.  In  short,  by  political  economists,  in 
everything  except  their  definitions  and  first  principles, 
as  well  as  by  the  world  at  large,  'Hhat  part  of  a  man's 
stock,"  to  use  the  words  of  Adam  Smith,  ''which  he  ex- 
pects to  afford  him  revenue  is  called  his  capital."  This 
is  the  only  sense  in  which  the  term  capital  expresses  any 
fixed  idea — the  only  sense  in  which  we  can  with  any 
clearness  separate  it  from  wealth  and  contrast  it  with 
labor.  For,  if  we  must  consider  as  capital  everything 
which  supplies  the  laborer  with  food,  clothing,  shelter, 
etc.,  then  to  find  a  laborer  who  is  not  a  capitalist  we  shall 
be  forced  to  hunt  up  an  absolutely  naked  man,  destitute 
even  of  a  sharpened  stick,  or  of  a  burrow  in  the  ground 
— a  situation  in  which,  save  as  the  result  of  exceptional 
circumstances,  human  beings  have  never  yet  been  found. 
It  seems  to  me  that  the  variance  and  inexactitude  in 
these  definitions  arise  from  the  fact  that  the  idea  of  what 
capital  is  has  been  deduced  from  a  preconceived  idea  of 
how  capital  assists  production.  Instead  of  determining 
what  capital  is,  and  then  observing  what  capital  does, 
the  functions  of  capital  have  first  been  assumed,  and 
then  a  definition  of  capital  made  which  includes  all 
things  which  do  or  may  perform  those  functions.  Let 
us  reverse  this  process,  and,  adopting  the  natural  order, 
ascertain  what  the  thing  is  before  settling  what  it  does. 
All  we  are  trying  to  do,  all  that  it  is  necessary  to  do,  is  to 
fix,  as  it  were,  the  metes  and  bounds  of  a  term  that  in 


Chap.  II.  THE  MEANING  OF  THE  TEEMS.  45 

the  main  is  well  apprehended — to  make  definite,  that  is, 
sharp  and  clear  on  its  verges,  a  common  idea. 

If  the  articles  of  actual  wealth  existing  at  a  given  time 
in  a  given  community  were  presented  iti  situ  to  a  dozen 
intelligent  men  who  had  never  read  a  line  of  political 
economy,  it  is  doubtful  if  they  would  differ  in  respect  to 
a  single  item,  as  to  whether  it  should  be  accounted  capi- 
tal or  not.  Money  which  its  owner  holds  for  use  in  his 
business  or  in  speculation  would  be  accounted  capital; 
money  set  aside  for  household  or  personal  expenses 
would  not.  That  part  of  a  farmer's  crop  held  for  sale  or 
for  seed,  or  to  feed  his  help  in  part  payment  of  wages, 
would  be  accounted  capital;  that  held  for  the  use  of  his 
own  family  would  not  be.  The  horses  and  carriage  of 
a  hackman  would  be  classed  as  capital,  but  an  equipage 
kept  for  the  pleasure  of  its  owner  would  not.  So  no  one 
would  think  of  counting  as  capital  the  false  hair  on  the 
head  of  a  woman,  the  cigar  in  the  mouth  of  a  smoker,  or 
the  toy  with  which  a  child  is  playing;  but  the  stock  of  a 
hair  dealer,  of  a  tobacconist,  or  of  the  keeper  of  a  toy 
store,  would  be  unhesitatingly  set  down  as  capital.  A 
coat  which  a  tailor  had  made  for  sale  would  be  accounted 
capital,  but  not  the  coat  he  had  made  for  himself.  Food 
in  the  possession  of  a  hotel-keeper  or  a  restaurateur 
would  be  accounted  capital,  but  not  the  food  in  the 
pantry  of  a  housewife,  or  in  the  lunch  basket  of  a  work- 
man. Pig  iron  in  the  hands  of  the  smelter,  or  founder, 
or  dealer,  would  be  accounted  capital,  but  not  the  pig 
iron  used  as  ballast  in  the  hold  of  a  yacht.  The  bellows 
of  a  blacksmith,  the  looms  of  a  factory,  would  be  capital, 
but  not  the  sewing  machine  of  a  woman  who  does  only 
her  own  work;  a  building  let  for  hire,  or  used  for  busi- 
ness or  productive  purposes,  but  not  a  homestead.  In 
short,  I  think  we  should  find  that  now,  as  when  Dr. 
Adam  Smith  wrote,  "that  part  of  a  man's  stock  which  he 
expects  to  yield  him  a  revenue  is  called  his  capital." 


46  WAGES   AND   CAPITAL.  Book  I. 

And,  omitting  his  unfortunate  slip  as  to  personal  quali- 
ties, and  qualifying  somewhat  his  enumeration  of  money, 
it  is  doubtful  if  we  could  better  list  the  different  articles 
of  capital  than  did  Adam  Smith  in  the  passage  which  in 
the  previous  part  of  this  chapter  I  have  condensed. 

Now,  if,  after  having  thus  separated  the  wealth  that  is 
capital  from  the  wealth  that  is  not  capital,  we  look  for 
the  distinction  between  the  two  classes,  we  shall  not  find 
it  to  be  as  to  the  character,  capabilities,  or  final  destina- 
tion of  the  things  themselves,  as  has  been  vainly  at- 
tempted to  draw  it;  but  it  seems  to  me  that  we  shall  find 
it  to  be  as  to  whether  they  are  or  are  not  in  the  posses- 
sion of  the  consumer.*  Such  articles  of  wealth  as  in 
themselves,  in  their  uses,  or  in  their  products,  are  yet  to 
be  exchanged  are  capital;  such  articles  of  wealth  as  are  in 
the  hands  of  the  consumer  are  not  capital.  Hence,  if  we 
define  capital  as  ivealth  in  course  of  exchange,  understand- 
ing exchange  to  include  not  merely  the  passing  from  hand 
to  hand,  but  also  such  transmutations  as  occur  when  the 
reproductive  or  transforming  forces  of  nature  are  utilized 
for  the  increase  of  wealth,  we  shall,  I  think,  comprehend 
all  the  things  that  the  general  idea  of  capital  properly 
includes,  and  shut  out  all  it  does  not.  Under  this  defini- 
tion, it  seems  to  me,  for  instance,  will  fall  all  such  tools 
as  are  really  capital.  For  it  is  as  to  whether  its  services 
or  uses  are  to  be  exchanged  or  not  which  makes  a  tool 
an  article   of  capital   or  merely  an   article   of  wealth. 

*  Money  may  be  said  to  be  in  the  hands  of  the  consumer  when 
devoted  to  the  procurement  of  gratification,  as,  though  not  in  itself 
devoted  to  consumption,  it  represents  wealth  which  is;  and  thus 
what  in  the  previous  paragraph  I  have  given  as  the  common  classifi- 
cation would  be  covered  by  this  distinction,  and  would  be  substan- 
tially correct.  In  speaking  of  money  in  this  connection,  I  am  of 
course  speaking  of  coin,  for  although  paper  money  may  perform  all 
the  functions  of  coin,  it  is  not  wealth,  and  cannot  therefore  be 
capital. 


Chap.  11.  THE  MEANING   OF  THE  TERMS.  47 

Thus,  the  lathe  of  a  manufacturer  used  in  making  things 
which  are  to  be  exchanged  is  capital,  while  the  lathe  kept 
by  a  gentleman  for  his  own  amusement  is  not.  Thus, 
wealth  used  in  the  construction  of  a  railroad,  a  public 
telegraph  line,  a  stage  coach,  a  theater,  a  hotel,  etc.,  may- 
be said  to  be  placed  in  the  course  of  exchange.  The  ex- 
change is  not  effected  all  at  once,  but  little  by  little,  with 
an  indefinite  number  of  people.  Yet  there  is  an  ex- 
change, and  the  ''consumers"  of  the  railroad,  the  tele- 
graph line,  the  stage  coach,  theater  or  hotel,  are  not  the 
owners,  but  the  persons  Who  from  time  to  time  use  them. 

Nor  is  this  definition  inconsistent  with  the  idea  that 
capital  is  that  part  of  wealth  devoted  to  production.  It 
is  too  narrow  an  understanding  of  production  which  con- 
fines it  merely  to  the  making  of  things.  Production  in- 
cludes not  merely  the  making  of  things,  but  the  bringing 
of  them  to  the  consumer.  The  merchant  or  storekeeper 
is  thus  as  truly  a  producer  as  is  the  manufacturer,  or 
farmer,  and  his  stock  or  capital  is  as  much  devoted  to 
production  as  is  theirs.  But  it  is  not  worth  while  now 
to  dwell  upon  the  functions  of  capital,  which  we  shall  be 
better  able  to  determine  hereafter.  Nor  is  the  definition 
of  capital  I  have  suggested  of  any  importance.  I  am  not 
writing  a  text-book,  but  only  attempting  to  discover  the 
laws  which  control  a  great  social  problem,  and  if  the 
reader  has  been  led  to  form  a  clear  idea  of  what  things 
are  meant  when  we  speak  of  capital  my  purpose  is  served. 

But  before  closing  this  digression  let  me  call  attention 
to  what  is  often  forgotten — namely,  that  the  terms 
"wealth,"  "capital,"  "wages,"  and  the  like,  as  used  in 
political  economy  are  abstract  terms,  and  that  nothing 
can  be  generally  affirmed  or  denied  of  them  that  cannot 
be  affirmed  or  denied  of  the  whole  class  of  things  they 
represent.  The  failure  to  bear  this  in  mind  has  led  to 
much  confusion  of  thought,  and  permits  fallacies,  other- 
wise transparent,  to  pass  for  obvious  truths.     Wealth 


48  WAGES  AKD  CAPITAL.  Book  1. 

being  an  abstract  term,  the  idea  of  wealth,  it  must  be 
remembered,  involves  the  idea  of  exchange  ability.  The 
possession  of  wealth  to  a  certain  amount  is  potentially 
the  possession  of  any  or  all  species  of  wealth  to  that 
equivalent  in  exchange.  And,  consequently,  so  of 
capital. 


CHAPTEB  III. 

WAGES  NOT    DRAWJSr   FROM    CAPITAL,    BUT   PRODUCED     BY 

THE   LABOR. 

The  importance  of  this  digression  will,  I  think,  be- 
come more  and  more  apparent  as  we  proceed  in  our  in- 
quiry, but  its  pertinency  to  the  branch  we  are  now 
engaged  in  may  at  once  be  seen. 

It  is  at  first  glance  evident  that  the  economic  meaning 
of  the  term  wages  is  lost  sight  of,  and  attention  is  con- 
centrated upon  the  common  and  narrow  meaning  of  the 
word,  when  it  is  affirmed  that  wages  are  drawn  from 
capital.  For,  in  all  those  cases  in  which  the  laborer  is 
his  own  employer  and  takes  directly  the  produce  of  his 
labor  as  its  reward,  it  is  plain  enough  that  wages  are  not 
drawn  from  capital,  but  result  directly  as  the  product  of 
the  labor.  If,  for  instance,  I  devote  my  labor  to  gather- 
ing birds'  eggs  or  picking  wild  berries,  the  eggs  or  berries 
I  thus  get  are  my  wages.  Surely  no  one  will  contend 
that  in  such  a  case  wages  are  drawn  from  capital.  There 
is  no  capital  in  the  case.  An  absolutely  naked  man, 
thrown  on  an  island  where  no  human  being  has  before 
trod,  may  gather  birds'  eggs  or  pick  berries. 

Or  if  I  take  a  piece  of  leather  and  work  it  up  into  a 
pair  of  shoes,  the  shoes  are  my  wages — the  reward  of  my 
exertion.  Surely  they  are  not  drawn  from  capital — 
either  my  capital  or  any  one  else's  capital — but  are 
brought  into  existence  by  the  labor  of  which  they  become 
the  wages;  and  in  obtaining  this  pair  of  shoes  as  the 
wages  of  my  labor,  capital  is  not  even  momentarily  less- 


50  WAGES   AND   CAPITAL.  Book  I. 

ened  one  iota.  For,  if  we  call  iu  the  idea  of  capital,  my 
capital  at  the  beginning  consists  of  the  piece  of  leather, 
the  thread,  etc.  As  my  labor  goes  on,  value  is  steadily 
added,  until,  when  my  labor  results  in  the  finished  shoes, 
I  have  my  capital  plus  the  difference  in  value  between 
the  material  and  the  shoes.  In  obtaining  this  additional 
value — my  wages — how  is  capital  at  any  time  drawn 
upon? 

Adam  Smith,  who  gave  the  direction  to  economic 
thought  that  has  resulted  in  the  current  elaborate  theories 
of  the  relation  between  wages  and  capital,  recognized  the 
fact  that  in  such  simple  cases  as  I  have  instanced,  wages 
are  the  produce  of  labor,  and  thus  begins  his  chapter 
upon  the  wages  of  labor  (Chapter  VIII): 

"  The  produce  of  labor  constitutes  the  natural  recompense  or  wages 
of  labor.  In  that  original  state  of  things  which  precedes  both  the 
appropriation  of  land  and  the  accumulation  of  stock,  the  whole 
produce  of  labor  belongs  to  the  laborer.  He  has  neither  landlord  nor 
master  to  share  with  him. " 

Had  the  great  Scotchman  taken  this  as  the  initial  point 
of  his  reasoning,  and  continued  to  regard  the  produce  of 
labor  as  the  natural  wages  of  labor,  and  the  landlord  and 
master  but  as  sharers,  his  conclusions  would  have  been 
very  different,  and  political  economy  to-day  would  not 
embrace  such  a  mass  of  contradictions  and  absurdities; 
but  instead  of  following  the  truth  obvious  in  the  simple 
modes  of  production  as  a  clew  through  the  perplexities  of 
;  the  more  complicated  forms,  he  momentarily  recognizes 
it,  only  immediately  to  abandon  it,  and  stating  that  "in 
every  part  of  Europe  twenty  workmen  serve  under  a 
master  for  one  that  is  independent,"  he  recommences  the 
inquiry  from  a  point  of  view  in  which  the  master  is  con- 
sidered as  providing  from  his  capital  the  wages  of  his 
workmen. 

It  is  evident  that  in  thus  placing  the  proportion  of 


Chap.  III.  WAGES    NOT   DRAWK   FROM   CAPITAL.  51 

self-employing  workmen  as  but  one  in  twenty,  Adam 
Smith  had  in  mind  but  the  mechanic  arts,  and  that,  in- 
cluding all  laborers,  the  proportion  who  take  their  earn- 
ings directly,  without  the  intervention  of  an  employer, 
must,  even  in  Europe  a  hundred  years  ago,  have  been 
much  greater  than  this.  For,  besides  the  independent 
laborers  who  in  every  community  exist  in  considerable 
numbers,  the  agriculture  of  large  districts  of  Europe 
has,  since  the  time  of  the  Roman  Empire,  been  carried 
on  by  the  metayer  system,  under  which  the  capitalist  re- 
ceives his  return  from  the  laborer  instead  of  the  laborer 
from  the  capitalist.  At  any  rate,  in  the  United  States, 
where  any  general  law  of  wages  must  apply  as  fully  as  in 
Europe,  and  where  in  spite  of  the  advance  of  manufac- 
tures a  very  large  part  of  the  people  are  yet  self-employ- 
ing farmers,  the  proportion  of  laborers  who  get  their 
wages  through  an  employer  must  be  comparatively  small. 
But  it  is  not  necessary  to  discuss  the  ratio  in  which  self- 
smploying  laborers  anywhere  stand  to  hired  laborers,  nor 
is  it  necessary  to  multiply  illustrations  of  the  truism  that 
where  the  laborer  takes  directly  his  wages  they  are  the 
product  of  his  labor,  for  as  soon  as  it  is  realized  that  the 
term  wages  includes  all  the  earnings  of  labor,  as  well  when 
taken  directly  by  the  laborer  in  the  results  of  his  labor 
as  when  received  from  an  employer,  it  is  evident  that 
the  assumption  that  wages  are  drawn  from  capital,  on 
which  as  a  universal  truth  such  a  vast  superstructure  is 
in  standard  politico -economic  treatises  so  unhesitatingly 
built,  is  at  least  in  large  part  untrue,  and  the  utmost 
that  can  with  any  plausibility  be  affirmed,  is  that  some 
wages,  i.e.  wages  received  by  the  laborer  from  an  em- 
ployer, are  drawn  from  capital.  This  restriction  of  the 
major  premise  at  once  invalidates  all  the  deductions  that 
are  made  from  it;  but  without  resting  here,  let  us  see 
whether  even  in  this  restricted  sense  it  accords  with  the 
facts.     Let   us   pick   up   the   clew  where   Adam    Smith 


52  WAGES   AND   CAPITAL.  Book  I. 

dropped  it,  and  advancing  step  by  step,  see  whether  the 
relation  of  facts  which  is  obvious  in  the  simplest  forms 
of  production  does  not  run  through  the  most  comj)lex. 

Next  in  simplicity  to  "that  original  state  of  things," 
of  which  many  examples  may  yet  be  found,  where  the 
whole  produce  of  labor  belongs  to  the  laborer,  is  the  ar- 
rangement in  which  the  laborer,  though  working  for 
another  person,  or  with  the  capital  of  another  person, 
receives  his  wages  in  kind— that  is  to  say,  in  the  things 
his  labor  produces.  In  this  case  it  is  as  clear 
as  in  the  case  of  the  self-employing  laborer  that 
the  wages  are  really  drawn  from  the  product  of  the 
labor,  and  not  at  all  from  capital.  If  I  hire  a  man 
to  gather  eggs,  to  pick  berries,  or  to  make  shoes,  paying 
him  from  the  eggs,  the  berries,  or  the  shoes  that  his 
labor  secures,  there  can  be  no  question  that  the  source 
of  the  wages  is  the  labor  for  which  they  are  paid.  Of 
this  form  of  hiring  is  the  saer-and-daer  stock  tenancy, 
treated  of  with  such  perspicuity  by  Sir  Henry  Maine  in 
his  "Early  History  of  Institutions,"  and  which  so  clearly 
involved  the  relation  of  employer  and  employed  as  to 
render  the  acceptor  of  cattle  the  man  or  vassal  of  the 
capitalist  who  thus  employed  him.  It  was  on  such  terms 
as  these  that  Jacob  worked  for  Laban,  and  to  this  day, 
even  in  civilized  countries,  it  is  not  an  infrequent  mode 
of  employing  labor.  The  farming  of  land  on  shares, 
which  prevails  to  a  considerable  extent  in  the  Southern 
States  of  the  Union  and  in  California,  the  metayer  system 
of  Europe,  as  well  as  the  many  cases  in  which  superin- 
tendents, salesmen,  etc.,  are  paid  by  a  percentage  of  prof- 
its, what  are  they  but  the  employment  of  labor  for  wages 
which  consist  of  part  of  its  produce? 

The  next  step  in  the  advance  from  simplicity  to  com- 
plexity is  where  the  wages,  though  estimated  in  kind, 
are  paid  in  an  equivalent  of  something  else.  For  in- 
stance, on  American  whaling  ships  the  custom  is  not  to 


Chap.  III.  WAGES  NOT  DRAWN   FROM   CAPITAL.  53 

pay  fixed  wages,  but  a  "lay,"  or  proportion  of  the  catch, 
which  varies  from  a  sixteenth  to  a  twelfth  to  the  captain 
down  to  a  three-hundredth  to  the  cabin-boy.  Thus, 
when  a  whaleship  comes  into  New  Bedford  or  San  Fran- 
cisco after  a  successful  cruise,  she  carries  in  her  hold  the 
wages  of  her  crew,  as  well  as  the  profits  of  her  owners, 
and  an  equivalent  which  will  reimburse  them  for  all  the 
stores  used  up  during  the  voyage.  Can  anything  be 
clearer  than  that  these  wages — this  oil  and  bone  which 
the  crew  of  the  whaler  have  taken — have  not  been  drawn 
from  capital,  but  are  really  a  part  of  the  produce  of  their 
labor?  Nor  is  this  fact  changed  or  obscured  in  the 
slightest  degree  where,  as  a  matter  of  convenience,  in- 
stead of  dividing  up  between  the  crew  their  ]3roportion 
of  the  oil  and  bone,  the  value  of  each  man's  share  is  esti- 
mated at  the  market  price,  and  he  is  paid  for  it  in 
money.  The  money  is  but  the  equivalent  of  the  real 
wages,  the  oil  and  bone.  In  no  way  is  there  any  advance 
of  capital  in  this  payment.  The  obligation  to  pay  wages 
does  not  accrue  until  the  value  from  which  they  are  to 
be  paid  is  brought  into  port.  At  the  moment  when  the 
owner  takes  from  his  capital  money  to  pay  the  crew  he 
adds  to  his  capital  oil  and  bone. 

So  far  there  can  be  no  dispute.  Let  us  now  take 
another  ste^j,  which  will  bring  us  to  the  usual  method  of 
employing  labor  and  paying  wages. 

The  Farallone  Islands,  off  the  Bay  of  San  Francisco, 
are  a  hatching  ground  of  sea-fowl,  and  a  company  who 
claim  these  islands  employ  men  in  the  proper  season  to 
collect  the  eggs.  They  might  employ  these  men  for  a 
proportion  of  the  eggs  they  gather,  as  is  done  in  the 
whale  fishery  and  probably  would  do  so  if  there  were 
much  uncertainty  attending  the  business;  but  as  the  fowl 
are  plentiful  and  tame,  and  about  so  many  eggs  can  be 
gathered  by  so  much  labor,  they  find  it  more  convenient 
to  pay  their  men  fixed  wages.     The  men  go  out  and  re- 


54  WAGES  AND   CAPITAL.  Book  I. 

main  on  the  islands,  gathering  the  eggs  and  bringing 
them  to  a  landing,  whence,  at  intervals  of  a  few  days, 
they  are  taken  in  a  small  vessel  to  San  Francisco  and 
sold.  When  the  season  is  over  the  men  return  and  are 
paid  their  stipulated  wages  in  coin.  Does  not  this  trans- 
action amount  to  the  same  thing  as  if,  instead  of  being 
paid  in  coin,  the  stipulated  wages  were  paid  in  an  equiva- 
lent of  the  eggs  gathered?  Does  not  the  coin  represent 
the  eggs,  by  the  sale  of  which  it  was  obtained,  and  are 
not  these  wages  as  much  the  product  of  the  labor  for 
which  they  are  paid  as  the  eggs  would  be  in  the  posses- 
sion of  a  man  who  gathered  them  for  himself  without  the 
intervention  of  any  employer? 

To  take  another  example,  which  shows  by  reversion 
the  identity  of  wages  in  money  with  wages  in  kind.  In 
San  Buenaventura  lives  a  man  who  makes  an  excellent 
living  by  shooting  for  their  oil  and  skins  the  common 
hair  seals  which  frequent  the  islands  forming  the  Santa 
Barbara  Channel.  When  on  these  sealing  expeditions  he 
takes  two  or  three  Chinamen  along  to  help  him,  whom 
at  first  he  paid  wholly  in  coin.  But  it  seems  that  the 
Chinese  highly  value  some  of  the  organs  of  the  seal, 
which  they  dry  and  pulverize  for  medicine,  as  well  as 
the  long  hairs  in  the  whiskers  of  the  male  seal,  which, 
when  over  a  certain  length,  they  greatly  esteem  for 
some  purpose  that  to  outside  barbarians  is  not  very 
clear.  And  this  man  soon  found  that  the  Chinamen 
were  very  willing  to  take  instead  of  money  these  parts  of 
the  seals  killed,  so  that  now,  in  large  part,  he  thus  pays 
them  their  wages. 

Now,  is  not  what  may  be  seen  in  all  these  cases — the 
identity  of  wages  in  money  with  wages  in  kind — true  of 
all  cases  in  which  wages  are  paid  for  productive  labor?  Is 
not  the  fund  created  by  the  labor  really  the  fund  from 
which  the  wages  are  paid? 

It  may,  perhaps,  be  said:  "There  is  this  difference — 


Chap.  in.  WAGES  KOT   DRAWN  FROM  CAPITAL.  55 

where  a  man  works  for  himself,  or  where,  when  working 
for  an  employer,  he  takes  his  wages  in  kind,  his  wages 
depend  upon  the  result  of  his  labor.  Should  that,  from 
any  misadventure,  prove  futile,  he  gets  nothing.  When 
he  works  for  an  employer,  however,  he  gets  his  wages 
anyhow — they  depend  upon  the  performance  of  the  labor, 
not  upon  the  result  of  the  labor."  But  this  is  evidently 
not  a  real  distinction.  For  on  the  average,  the  labor 
that  is  rendered  for  fixed  wages  not  only  yields  the 
amount  of  the  wages,  but  more;  else  employers  could 
make  no  profit.  When  wages  are  fixed,  the  employer 
takes  the  whole  risk  and  is  compensated  for  this  assur- 
ance, for  wages  when  fixed  are  always  somewhat  less  than 
wages  contingent.  But  though  when  fixed  wages  are 
stipulated  the  laborer  who  has  performed  his  part  of  the 
contract  has  usually  a  legal  claim  upon  the  employer,  it 
is  frequently,  if  not  generally,  the  case  that  the  disaster 
which  prevents  the  employer  from  reaping  benefit  from 
the  labor  prevents  him  from  paying  the  wages.  And  in 
one  important  department  of  industry  the  employer  is 
legally  exempt  in  case  of  disaster,  although  the  contract 
be  for  wages  certain  and  not  contingent.  For  the  maxim 
of  admiralty  law  is,  that  "freight  is  the  mother  of 
wages,"  and  though  the  seaman  may  have  performed  his 
part,  the  disaster  which  prevents  the  ship  from  earning 
freight  deprives  him  of  claim  for  his  wages. 

In  this  legal  maxim  is  embodied  the  truth  for  which  I 
am  contending.  Production  is  always  the  mother  of 
wages.  Without  production,  wages  would  not  and  could 
not  be.  It  is  from  the  produce  of  labor,  not  from  the 
advances  of  capital  that  wages  come. 

Wherever  we  analyze  the  facts  this  will  be  found  to  be 
true.  For  labor  always  precedes  wages.  This  is  as  uni- 
versally true  of  wages  received  by  the  laborer  from  an 
employer  as  it  is  of  wages  taken  directly  by  the  laborer 
who  is  his  own  employer.     In  the  one  class  of  cases  as 


56  WAGES   AND   CAPITAL.  Book  L 

in  the  other,  reward  is  conditioned  upon  exertion.  Paid 
sometimes  by  the  day,  oftener  by  the  week  or  month, 
occasionally  by  the  year,  and  in  many  branches  of  pro- 
duction by  the  piece,  the  payment  of  wages  by  an  em- 
ployer to  an  employee  always  implies  the  previous  ren- 
dering of  labor  by  the  employee  for  the  benefit  of  the 
employer,  for  the  few  cases  in  which  advance  payments 
are  made  for  personal  services  are  evidently  referable 
either  to  charity  or  to  guarantee  and  purchase.  The 
name  "retainer,"  given  to  advance  payments  to  lawyers, 
shows  the  true  character  of  the  transaction,  as  does  the 
name  ''blood  money"  given  in  'longshore  vernacular  to  a 
payment  which  is  nominally  wages  advanced  to  sailors, 
but  which  in  reality  is  purchase  money — both  English 
and  American  law  considering  a  sailor  as  much  a  chattel 
as  a  pig. 

I  dwell  on  this  obvious  fact  that  labor  always  precedes 
wages,  because  it  is  all-important  to  an  understanding  of 
the  more  complicated  phenomena  of  wages  that  it  should 
be  kept  in  mind.  And  obvious  as  it  is,  as  I  have  put  it, 
the  plausibility  of  the  proposition  that  wages  are  drawn 
from  capital— a  proposition  that  is  made  the  basis  for 
such  important  and  far-reaching  deductions — comes  in 
the  first  instance  from  a  statement  that  ignores  and  leads 
the  attention  away  from  this  truth.  That  statement  is, 
that  labor  cannot  exert  its  productive  power  unless  sup- 
plied by  capital  with  maintenance.*     The  unwary  reader 

*  Industry  is  limited  by  capital.  .  .  There  can  be  no  more  in- 
dustry than  is  supplied  with  materials  to  work  up  and  food  to  eat. 
Self-evident  as  the  thing  is,  it  is  often  forgotten  that  the  people  of  a 
country  are  maintained  and  have  their  wants  supplied  not  by  the 
produce  of  present  labor,  but  of  past.  They  consume  what  has 
been  produced,  not  what  is  about  to  be  produced.  Now,  of  what 
has  been  produced  a  part  only  is  allotted  to  the  support  of  pro- 
ductive labor,  and  there  will  not  and  cannot  be  more  of  that  labor 


Chap.  HI.  WAGES   NOT   DRAWN   FROM   CAPITAL.  67 

at  once  recognizes  the  fact  that  the  laborer  must  have 
food,  clothing,  etc.,  in  order  to  enable  Iiim  to  perform 
the  work,  and  having  been  told  that  the  food,  clothing, 
etc.,  used  by  productive  laborers  are  capital,  he  assents 
to  the  conclusion  that  the  consumption  of  capital  is  nec- 
essary to  the  application  of  labor,  and  from  tliis  it  is  but 
an  obvious  deduction  that  industry  is  limited  by  capital 
— that  the  demand  for  labor  depends  upon  the  supply  of 
capital,  and  hence  that  wages  depend  upon  the  ratio  be- 
tween the  number  of  laborers  looking  for  employment 
and  the  amount  of  capital  devoted  to  hiring  them. 

But  I  think  the  discussion  in  the  previous  chapter  will 
enable  any  one  to  see  wherein  lies  the  fallacy  of  this  rea- 
soning— a  fallacy  which  has  entangled  some  of  the  most 
acute  minds  in  a  web  of  their  own  spinning.  It  is  in  the 
use  of  the  term  capital  in  two  senses.  In  the  primary 
proposition  that  capital  is  necessary  to  the  exertion  of 
productive  labor,  the  term  "capital"  is  understood  as  in- 
cluding all  food,  clothing,  shelter,  etc.;  whereas,  in  the 
deductions  finally  drawn  from  it,  the  term  is  used  in  its 
common  aud  legitimate  meaning  of  wealth  devoted,  not 
to  the  immediate  gratification  of  desire,  but  to  the  pro- 
curement of  more  wealth — of  wealth  in  the  hands  of  em- 
ployers as  distinguished  from  laborers.  The  conclusion 
is  no  more  valid  than  it  would  be  from  the  acceptance  of 
the  proposition  that  a  laborer  cannot  go  to  work  without 
his  breakfast  and  some  clothes,  to  infer  that  no  more 
laborers  can  go  to  work  than  employers  first  furnish  with 
breakfasts  and  clothes.  Now,  the  fact  is  that  laborers 
generally  furnish  their  own  breakfasts  and  the  clothes  in 
which  they  go  to  work;  and  the  further  fact   is  that 

than  the  portion  so  allotted  (which  is  the  capital  of  the  country)  can 
feed  and  provide  with  the  materials  and  instruments  of  production. 
— John  Stuart  Mill,  Principles  of  Political  Economy,  Book  I,  Chap. 
V,  Sec.  I. 


58  WAGES  AND   CAPITAL.  Booh  I. 

capital  (in  the  sense  in  which  the  word  is  used  in  distinc- 
tion to  labor)  in  exceptional  cases  sometimes  may,  but  is 
never  compelled  to  make  advances  to  labor  before  the 
work  begins.  Of  all  the  vast  number  of  unemployed 
laborers  in  the  civilized  world  to-day,  there  is  probably 
not  a  single  one  willing  to  work  who  could  not  be  em- 
ployed without  any  advance  of  wages.  A  great  propor- 
tion would  doubtless  gladly  go  to  work  on  terms  which 
did  not  require  the  payment  of  wages  before  the  end  of 
a  month;  it  is  doubtful  if  there  are  enough  to  be  called 
a  class  who  would  not  go  to  work  and  wait  for  their 
wages  until  the  end  of  the  week,  as  most  laborers  habit- 
ually do;  while  there  are  certainly  none  who  would  not 
wait  for  their  wages  until  the  end  of  the  day,  or  if  you 
please,  until  the  next  meal  hour.  The  precise  time  of 
the  payment  of  wages  is  immaterial;  the  essential  point 
— the  point  I  lay  stress  on — is  that  it  is  after  the  per- 
formance of  work. 

The  payment  of  wages,  therefore,  always  implies  the 
previous  rendering  of  labor.  Now,  what  does  the  render- 
ing of  labor  in  production  imply?  Evidently  the  produc- 
tion of  wealth,  which,  if  it  is  to  be  exchanged  or  used  in 
production,  is  capital.  Therefore,  the  payment  of  capi- 
tal in  wages  pre-supposes  a  production  of  capital  by  the 
labor  for  which  the  wages  are  paid.  And  as  the  em- 
ployer generally  makes  a  profit,  the  payment  of  wages  is, 
so  far  as  he  is  concerned,  but  the  return  to  the  laborer 
of  a  portion  of  the  capital  he  has  received  from  the  labor. 
So  far  as  the  employee  is  concerned,  it  is  but  the  receipt 
of  a  portion  of  the  capital  his  labor  has  previously  pro- 
duced. As  the  value  paid  in  the  wages  is  thus  exchanged 
for  a  value  brought  into  being  by  the  labor,  how  can  it 
be  said  that  wages  are  drawn  from  capital  or  advanced  by 
capital?  As  in  the  exchange  of  labor  for  wages  the  em- 
ployer always  gets  the  capital  created  by  the  labor  before 


Chap.  III.  WAGES   NOT   DKAWN"   FROM    CAPITAL.  59 

he  pays  out  capital  in  the  wages,  at  what  point  is  his 
capital  lessened  even  temporarily?  * 

Bring  the  question  to  the  test  of  facts.  Take,  for  in- 
stance, an  employing  manufacturer  who  is  engaged  in 
turning  raw  material  into  finished  products — cotton  into 
cloth,  iron  into  hardware,  leather  into  boots,  or  so  on,  as 
may  be,  and  who  pays  his  hands,  as  is  generally  the  case, 
once  a  week.  Make  an  exact  inventory  of  his  capital  on 
Monday  morning  before  the  beginning  of  work,  and  it 
will  consist  of  his  buildings,  machinery,  raw  materials, 
money  on  hand,  and  finished  products  in  stock.  Sup- 
pose, for  the  sake  of  simplicity,  that  he  neither  buys  nor 
sells  during  the  week,  and  after  work  has  stopped  and  he 
has  paid  his  hands  on  Saturday  night,  take  a  new  inven- 
tory of  his  capital.  The  item  of  money  will  be  less,  for 
it  has  been  paid  out  in  wages;  there  will  be  less  raw 
material,  less  coal,  etc.,  and  a  proper  deduction  must  be 
made  from  the  value  of  the  buildings  and  machinery  for 
the  week's  wear  and  tear.  But  if  he  is  doing  a  remuner- 
ative business,  which  must  on  the  average  be  the  case, 
the  item  of  finished  products  will  be  so  much  greater  as 
to  compensate  for  all  these  deficiencies  and  show  in  the 
summing  up  an  increase  of  capital.  Manifestly,  then, 
the  value  he  paid  his  hands  in  wages  was  not  drawn  from 

*  I  speak  of  labor  producing  capital  for  the  sake  of  greater  clearness. 
What  labor  always  procures  is  either  wealth,  which  may  or  may  not 
be  capital,  or  services,  the  cases  in  which  nothing  is  obtained  being 
merely  exceptional  cases  of  misadventure.  Where  the  object  of  the 
labor  is  simply  the  gratification  of  the  employer,  as  where  I  hire  a 
man  to  black  my  boots,  I  do  not  pay  the  wages  from  capital,  but 
from  wealth  which  I  have  devoted,  not  to  reproductive  uses,  but  to 
consumption  for  my  own  satisfaction.  Even  if  wages  thus  paid  be 
considered  as  drawn  from  capital,  then  by  that  act  they  pass  from 
the  category  of  capital  to  that  of  wealth  devoted  to  the  gratification 
of  the  possessor,  as  when  a  cigar  dealer  takes  a  dozen  cigars  from 
the  stock  he  has  for  sale  and  puts  them  in  his  pocket  for  his  own 
use. 


60  WAGES   AND  CAPITAL.  Book  I. 

his  capital,  or  from  any  one  else's  capital.  It  came,  not 
from  capital,  but  from  the  value  created  by  the  labor 
itself.  There  was  no  more  advance  of  capital  than  if  he 
had  hired  his  hands  to  dig  clams,  and  paid  them  with  a 
part  of  the  clams  they  dug.  Their  wages  were  as  truly 
the  produce  of  their  labor  as  were  the  wages  of  the 
primitive  man,  when,  long  "before  the  appropriation  of 
land  and  the  accumulation  of  stock,"  he  obtained  an 
oyster  by  knocking  it  with  a  stone  from  the  rocks. 

As  the  laborer  who  works  for  an  employer  does  not  get 
his  wages  until  he  has  performed  the  work,  his  case  is 
similar  to  that  of  the  depositor  in  a  bank  who  cannot 
draw  money  out  until  he  has  put  money  in.  And  as  by 
drawing  out  what  he  has  previously  put  in,  the  bank  de- 
positor does  not  lessen  the  capital  of  the  bank,  neither 
can  laborers  by  receiving  wages  lessen  even  temporarily 
either  the  capital  of  the  employer  or  the  aggregate  capi- 
tal of  the  community.  Their  wages  no  more  come  from 
capital  than  the  checks  of  depositors  are  drawn  against 
bank  capital.  It  is  true  that  laborers  in  receiving  wages 
do  not  generally  receive  back  wealth  in  the  same  form  in 
which  they  have  rendered  it,  any  more  than  bank  deposi- 
tors receive  back  the  identical  coins  or  bank  notes  they 
have  deposited,  but  they  receive  it  in  equivalent  form, 
and  as  we  are  justified  in  saying  that  the  depositor  re- 
ceives from  the  bank  the  money  he  paid  in,  so  are  we 
justified  in  saying  that  the  laborer  receives  in  wages  the 
wealth  he  has  rendered  in  labor. 

That  this  universal  truth  is  so  often  obscured,  is 
largely  due  to  that  fruitful  source  of  economic  obscuri- 
ties, the  confounding  of  wealth  with  money;  and  it  is  re- 
markable to  see  so  many  of  those  who,  since  Dr.  Adam 
Smith  made  the  egg  stand  on  its  head,  have  copiously 
demonstrated  the  fallacies  of  the  mercantile  system,  fall 
into  delusions  of  the  very  same  kind  in  treating  of  the 
relations  of  capital  and  labor.     Money  being  the  general 


Chap.m.  -WAGES   liOT  DRAWN  FROM  CAPITAL.  61 

medium  of  exchanges,  the  common  flux  through  which 
all  transmutations  of  wealth  from  one  form  to  another 
take  place,  whatever  difficulties  may  exist  to  an  exchange 
will  generally  show  themselves  on  the  side  of  reduction 
to  money,  and  thus  it  is  sometimes  easier  to  exchange 
money  for  any  other  form  of  wealth  than  it  is  to  ex- 
change wealth  in  a  particular  form  into  money,  for  the 
reason  that  there  are  more  holders  of  wealth  who  desire 
to  make  some  exchange  than  there  are  who  desire  to 
make  any  particular  exchange.  And  so  a  producing  em- 
ployer who  has  paid  out  his  money  in  wages  may  some- 
times find  it  difficult  to  turn  quickly  back  into  money 
the  increased  value  for  which  his  money  has  really  been 
exchanged,  and  is  spoken  of  as  having  exhausted  or  ad- 
vanced his  capital  in  the  payment  of  wages.  Yet,  unless 
the  new  value  created  by  the  labor  is  less  than  the  wages 
paid,  which  can  be  only  an  exceptional  case,  the  capital 
which  he  had  before  in  money  he  now  has  in  goods — it 
has  been  changed  in  form,  but  not  lessened. 

There  is  one  branch  of  production  in  regard  to  which 
the  confusions  of  thought  which  arise  from  the  habit  of 
estimating  capital  in  money  are  least  likely  to  occur,  in- 
asmuch as  its  product  is  the  general  material  and  stand- 
ard of  money.  And  it  so  happens  that  this  business  fur- 
nishes us,  almost  side  by  side,  with  illustrations  of  pro- 
duction passing  from  the  simplest  to  most  complex 
forms. 

In  the  early  days  of  California,  as  afterward  in  Aus- 
tralia, the  placer  miner,  who  found  in  river  bed  or  sur- 
face deposit  the  glittering  particles  which  the  slow  proc- 
esses of  nature  had  for  ages  been  accumulating,  picked 
up  or  washed  out  his  "wages"  (so,  too,  he  called  them) 
in  actual  money,  for  coin  being  scarce,  gold  dust  passed 
as  currency  by  weight,  and  at  the  end  of  the  day  had  his 
wages  in  money  in  a  buckskin  bag  in  his  pocket.  There 
can  be  no  dispute  as  to  whether  these  wages  came  from 


68  WAGES  AND  CAPITAL. 


Booh  I. 


capital  or  not.  They  were  manifestly  the  produce  of  his 
labor.  Nor  could  there  be  any  dispute  when  the  holder 
of  a  specially  rich  claim  hired  men  to  work  for  him  and 
paid  them  off  in  the  identical  money  which  their  labor 
had  taken  from  gulch  or  bar.  As  coin  became  more 
abundant,  its  greater  convenience  in  saving  the  trouble 
and  loss  of  weighing  assigned  gold  dust  to  the  place  of  a 
commodity,  and  with  coin  obtained  by  the  sale  of  the 
dust  their  labor  had  procured,  the  employing  miner  paid 
off  his  hands.  Where  he  had  coin  enough  to  do  so,  in- 
stead of  selling  his  gold  dust  at  the  nearest  store  and 
paying  a  dealer's  profit,  he  retained  it  until  he  got 
enough  to  take  a  trip,  or  send  by  express  to  San  Pran- 
cisco,  where  at  the  mint  he  could  have  it  turned  into 
coin  without  charge.  While  thus  accumulating  gold 
dust  he  was  lessening  his  stock  of  coin;  just  as  the  man- 
ufacturer, while  accumulating  a  stock  of  goods,  lessens 
his  stock  of  money.  Yet  no  one  would  be  obtuse  enough 
to  imagine  that  in  thus  taking  in  gold  dust  and  paying 
out  coin  the  miner  was  lessening  his  capital. 

But  the  deposits  that  could  be  worked  without  pre- 
liminary labor  were  soon  exhausted,  and  gold  mining 
rapidly  took  a  more  elaborate  character.  Before  claims 
could  be  opened  so  as  to  yield  any  return  deep  shafts  had 
to  be  sunk,  great  dams  constructed,  long  tunnels  cut 
through  the  hardest  rock,  water  brought  for  miles  over 
mountain  ridges  and  across  deep  valleys,  and  expensive 
machinery  put  up.  These  works  could  not  be  con- 
structed without  capital.  Sometimes  their  construction 
required  years,  during  which  no  return  could  be  hoped 
for,  while  the  men  employed  had  to  be  paid  their  wages 
every  week,  or  every  month.  Surely,  it  will  be  said,  in  such 
cases,  even  if  in  no  others,  that  wages  do  actually  come 
from  capital;  are  actually  advanced  by  capital;  and  must 
necessarily  lessen  capital  in  their  payment!     Surely  here, 


Chap.  III.  WAGES   KOT   DRAWN   FROM   CAPITAL.  63 

at  least,  industry  is  limited  by  capital,  for  without  capi- 
tal such  works  could  not  be  carried  on!     Let  us  see: 

It  is  cases  of  this  class  that  are  always  instanced  as 
showing  that  wages  are  advanced  from  capital.  For 
where  wages  are  paid  before  the  object  of  the  labor  is  ob- 
tained, or  is  finished — as  in  agriculture,  where  plowing 
and  sowing  must  precede  by  several  months  the  harvest- 
ing of  the  crop;  as  in  the  erection  of  buildings,  the  con- 
struction of  ships,  railroads,  canals,  etc. — it  is  clear  that 
the  owners  of  the  capital  paid  in  wages  cannot  expect  an 
immediate  return,  but,  as  the  phrase  is,  must  "outlay 
it,"  or  "lie  out  of  it"  for  a  time,  which  sometimes 
amounts  to  many  years.  And  hence,  if  first  principles 
are  not  kept  in  mind,  it  is  easy  to  jump  to  the  conclusion 
that  wages  are  advanced  by  capital. 

But  such  cases  will  not  embarrass  the  reader  to  whom 
in  what  has  preceded  I  have  made  myself  clearly  unfler- 
stood.  An  easy  analysis  wiK  show  that  these  instances 
where  wages  are  paid  before  the  product  is  finished,  or 
even  produced,  do  not  afford  any  exception  to  the  rule 
apparent  where  the  product  is  finished  before  wages  are 
paid. 

If  I  go  to  a  broker  to  exchange  silver  for  gold,  I  lay 
down  my  silver,  which  he  counts  and  puts  away,  and 
then  hands  me  the  equivalent  in  gold,  minus  his  com- 
mission. Does  the  broker  advance  me  any  capital? 
Manifestly  not.  What  he  had  before  in  gold  he  now  has 
in  silver,  plus  his  profit.  And  as  he  got  the  silver  before 
he  paid  out  the  gold,  there  is  on  his  part  not  even  mo- 
mentarily an  advance  of  capital. 

Now,  this  operation  of  the  broker  is  precisely  analo- 
gous to  what  the  capitalist  does,  when,  in  such  cases  as  we 
are  now  considering,  he  pays  out  capital  in  wages.  As 
the  rendering  of  labor  precedes  the  payment  of  wages, 
and  as  the  rendering  of  labor  in  production  implies  the 


64  WAGES  AND   CAPITAL.  Book  1. 

creation  of  value,  the  employer  receives  value  before  he 
pays  out  value — he  but  exchanges  capital  of  one  form  for 
capital  of  another  form.  For  the  creation  of  value  does 
not  depend  upon  the  finishing  of  the  product;  it  takes 
place  at  every  stage  of  the  process  of  production,  as  the 
immediate  result  of  the  application  of  labor,  and  hence, 
no  matter  how  long  the  process  in  which  it  is  engaged, 
labor  always  adds  to  capital  by  its  exertion  before  it  takes 
from  capital  in  its  wages. 

Here  is  a  blacksmith  at  his  forge  making  picks. 
Clearly  he  is  making  capital — adding  picks  to  his  em- 
ployer's capital  before  he  draws  money  from  it  in  wages. 
Here  is  a  machinist  or  boilermaker  working  on  the  keel- 
plates  of  a  Great  Eastern.  Is  not  he  also  just  as  clearly 
creating  value — making  capital?  The  giant  steamship, 
as  the  pick,  is  an  article  of  wealth,  an  instrument  of  pro- 
duction, and  though  the  one  may  not  be  completed  for 
years,  while  the  other  is  completed  in  a  few  minutes, 
each  day's  work,  in  the  one  case  as  in  the  other,  is  as 
clearly  a  production  of  wealth — an  addition  to  capital. 
In  the  case  of  the  steamship,  as  in  the  case  of  the  pick,  it 
is  not  the  last  blow,  any  more  than  the  first  blow,  that 
creates  the  value  of  the  finished  product — the  creation 
of  value  is  continuous,  it  immediately  results  from  the 
exertion  of  labor. 

We  see  this  very  clearly  wherever  the  division  of  labor 
has  made  it  customary  for  difEerent  parts  of  the  full 
process  of  production  to  be  carried  on  by  different  sets 
of  producers — that  is  to  say,  wherever  we  are  in  the  habit 
of  estimating  the  amount  of  value  which  the  labor  ex- 
pended in  any  preparatory  stage  of  production  has 
created.  And  a  moment's  reflection  will  show  that  this 
is  the  case  as  to  the  vast  majority  of  products.  Take  a 
ship,  a  building,  a  jack-knife,  a  book,  a  lady's  thimble  or 
a  loaf  of  bread.  They  are  finished  products.  But  they 
were  not  produced  at  one  operation  or  by  one  set  of  pro- 


Chap.  in.  WAGES   KOT  DRAWK   FROM  CAPITAL.  65 

ducers.  And  this  being  the  case,  we  readily  distinguish 
different  points  or  stages  in  the  creation  of  the  value 
which  as  completed  articles  they  represent.  When  we 
do  not  distinguish  different  parts  in  the  final  process  of 
production  we  do  distinguish  the  value  of  the  materials. 
The  value  of  these  materials  may  often  be  again  decom- 
posed many  times,  exhibiting  as  many  clearly  defined 
steps  in  the  creation  of  the  final  value.  At  each  of  these 
steps  we  habitually  estimate  a  creation  of  value,  an  ad- 
dition to  capital.  The  batch  of  bread  which  the  baker  is 
taking  from  the  oven  has  a  certain  value.  But  this  is 
composed  in  part  of  the  value  of  the  flour  from  which  the 
dough  was  made.  And  this  again  is  composed  of  the 
value  of  the  wheat,  the  value  given  by  milling,  etc. 
Iron  in  the  form  of  pigs  is  very  far  from  being  a  com- 
pleted product.  It  must  yet  pass  through  several,  or, 
perhaps,  through  many,  stages  of  production  before  it 
results  in  the  finished  articles  that  were  the  ultimate  ob- 
jects for  which  the  iron  ore  was  extracted  from  the  mine. 
Yet,  is  not  pig  iron  capital?  And  so  the  process  of  pro- 
duction is  not  really  completed  when  a  crop  of  cotton  is 
gathered,  nor  yet  when  it  is  ginned  and  pressed;  nor  yet 
when  it  arrives  at  Lowell  or  Manchester;  nor  yet  when  it 
is  converted  into  yarn;  nor  yet  when  it  becomes  cloth; 
but  only  when  it  is  finally  placed  in  the  hands  of  the 
consumer.  Yet  at  each  step  in  this  progress  there  is 
clearly  enough  a  creation  of  value — an  addition  to  cajjital. 
Why,  therefore,  although  we  do  not  so  habitually  dis- 
tinguish and  estimate  it,  is  there  not  a  creation  of  value 
— an  addition  to  capital — when  the  ground  is  plowed  for 
the  crop?  Is  it  because  it  may  possibly  be  a  bad  season 
and  the  crop  may  fail?  Evidently  not;  for  a  like  possi- 
bility of  misadventure  attends  every  one  of  the  many 
steps  in  the  production  of  the  finished  article.  On  the 
average  a  crop  is  sure  to  come  up,  and  so  much  plowing 
and  sowing  will  on  the  average  result  in  so  much  cotton 


66  WAGES   AND   CAPITAL.  Book  I. 

in  the  boll,  as  surely  as  so  much  spinning  of  cotton  yarn 
will  result  in  so  much  cloth. 

In  short,  as  the  payment  of  wages  is  always  condi- 
tioned upon  the  rendering  of  labor,  the  payment  of 
wages  in  production,  no  matter  how  long  the  process, 
never  involves  any  advance  of  capital,  or  even  tempo- 
rarily lessens  capital.  It  may  take  a  year,  or  even  years, 
to  build  a  ship,  but  the  creation  of  value  of  which  the 
finished  ship  will  be  the  sum  goes  on  day  by  day,  and 
hour  by  hour,  from  the  time  the  keel  is  laid  or  even  the 
ground  is  cleared.  Nor  by  the  payment  of  wages  before 
the  ship  is  completed,  does  the  master  builder  lessen 
either  his  capital  or  the  capital  of  the  community,  for 
the  value  of  the  partially  completed  ship  stands  in  place 
of  the  value  paid  out  in  wages.  There  is  no  advance  of 
capital  in  this  payment  of  wages,  for  the  labor  of  the 
workmen  during  the  week  or  month  creates  and  renders 
to  the  builder  more  capital  than  is  paid  back  to  them  at 
the  end  of  the  week  or  month,  as  is  shown  by  the  fact 
that  if  the  builder  were  at  any  stage  of  the  construction 
asked  to  sell  a  partially  completed  ship  he  would  expect 
a  profit. 

And  so,  when  a  Sutro  or  St.  Gothard  tunnel  or  a 
Suez  canal  is  cut,  there  is  no  advance  of  capital.  The 
tunnel  or  canal,  as  it  is  cut,  becomes  capital  as  much  as 
the  money  spent  in  cutting  it — or,  if  you  please,  the 
powder,  drills,  etc.,  used  in  the  work,  and  the  food, 
clothes,  etc.,  used  by  the  workmen — as  is  shown  by  the 
fact  that  the  value  of  the  capital  stock  of  the  company  is 
not  lessened  as  capital  in  these  forms  is  gradually 
changed  into  capital  in  the  form  of  tunnel  or  canal.  On 
the  contrary,  it  probably,  and  on  the  average,  increases 
as  the  work  progresses,  just  as  the  capital  invested  in  a 
speedier  mode  of  production  would  on  the  average 
increase. 

And  this  is  obvious  in  agriculture  also.     That  the 


Chap.  in.  WAGES   NOT  DRAWN   FROM   CAPITAL.  67 

creation  of  value  does  not  take  place  all  at  once  when 
the  crop  is  gathered,  but  step  by  step  during  the  whole 
process  which  the  gathering  of  the  crop  concludes,  and 
that  no  payment  of  wages  in  the  interim  lessens  the 
farmer's  capital,  is  tangible  enough  when  land  is  sold  or 
rented  during  the  process  of  production,  as  a  plowed  field 
will  bring  more  than  an  unplowed  field,  or  a  field  that 
has  been  sown  more  than  one  merely  plowed.  It  is 
tangible  enough  when  growing  crops  are  sold,  as  is  some- 
times done,  or  where  the  farmer  does  not  harvest  him- 
self, but  lets  a  contract  to  the  owner  of  harvesting  ma- 
chinery. It  is  tangible  in  the  case  of  orchards  and  vine- 
yards which,  though  not  yet  in  bearing,  bring  prices 
proportionate  to  their  age.  It  is  tangible  in  the  case  of 
horses,  cattle  and  sheep,  which  increase  in  value  as  they 
grow  toward  maturity.  And  if  not  always  tangible  be- 
tween what  may  be  called  the  usual  exchange  points  in 
production,  this  increase  of  value  as  surely  takes  place 
with  every  exertion  of  labor.  Hence,  where  labor  is 
rendered  before  wages  are  paid,  the  advance  of  capital  is 
really  made  by  labor,  and  is  from  the  employed  to  the 
emijloyer,  not  from  the  employer  to  the  employed. 

"Yet,"  it  may  be  said,  "in  such  cases  as  we  have  been 
considering  capital  is  required!"  Certainly;  I  do  not 
dispute  that.  But  it  is  not  required  in  order  to  make 
advances  to  labor.  It  is  required  for  quite  another  pur- 
pose.    What  that  purpose  is  we  may  readily  see. 

When  wages  are  paid  in  kind — that  is  to  say,  in  wealth 
of  the  same  species  as  the  labor  produces;  as,  for  in- 
stance, if  I  hire  men  to  cut  wood,  agreeing  to  give  them 
as  wages  a  portion  of  the  wood  they  cut,  a  method  some- 
times adopted  by  the  owners  or  lessees  of  woodland,  it 
is  evident  that  no  capital  is  required  for  the  payment  of 
wages.  Nor  yet  when,  for  the  sake  of  mutual  conven- 
ience, arising  from  the  fact  that  a  large  quantity  of  wood 
can  be  more  readily  and  more  advantageously  exchanged 


68  WAGES  AND  CAPITAL.  Book  I 

than  a  number  of  small  quantities,  I  agree  to  pay  wages 
in  money,  instead  of  wood,  shall  I  need  any  capital, 
provided  I  can  make  the  exchange  of  the  wood  for  money 
before  the  wages  are  due.  It  is  only  when  I  cannot 
make  such  an  exchange,  or  such  an  advantageous  ex- 
change as  I  desire,  until  I  accumulate  a  large  quantity 
of  wood  that  I  shall  need  capital.  Nor  even  then  shall 
I  need  capital  if  I  can  make  a  partial  or  tentative  ex- 
change by  borrowing  on  my  wood.  If  I  cannot,  or  do 
not  choose,  either  to  sell  the  wood  or  to  borrow  upon  it, 
and  yet  wish  to  go  ahead  accumulating  a  large  stock  of 
wood,  I  shall  need  capital.  But  manifestly,  I  need  this 
capital,  not  for  the  payment  of  wages,  but  for  the  accu- 
mulation of  a  stock  of  wood.  Likewise  in  cutting  a 
tunnel.  If  the  workmen  were  paid  in  tunnel  (which,  if 
convenient,  might  easily  be  done  by  paying  them  in  stock 
of  the  company),  no  capital  for  the  payment  of  wages 
would  be  required.  It  is  only  when  the  undertakers 
wish  to  accumulate  capital  in  the  shape  of  a  tunnel  that 
they  will  need  capital.  To  recur  to  our  first  illustration: 
The  broker  to  whom  I  sell  my  silver  cannot  carry  on 
his  business  without  capital.  But  he  does  not  need  this 
capital  because  he  makes  any  advance  of  capital  to 
me  when  he  receives  my  silver  and  hands  me  gold.  He 
needs  it  because  the  nature  of  the  business  requires  the 
keeping  of  a  certain  amount  of  capital  on  hand,  in  order 
that  when  a  customer  comes  he  may  be  prepared  to  make 
the  exchange  the  customer  desires. 

And  so  we  shall  find  it  in  every  branch  of  production. 
Capital  has  never  to  be  set  aside  for  the  payment  of 
wages  when  the  produce  of  the  labor  for  which  the  wages 
are  paid  is  exchanged  as  soon  as  produced;  it  is  only 
required  when  this  produce  is  stored  up,  or  what  is  to 
the  individual  the  same  thing,  placed  in  the  general  cur- 
rent of  exchanges  without  being  at  once  drawn  against— 
that  is,  sold  on  credit.     But  the  capital  thus  required  is 


Chap.m.  WAGES   NOT   DRAWN"  FROM  CAPITAL.  69 

not  required  for  the  payment  of  wages,  nor  for  advances 
to  labor,  as  it  is  always  represented  in  the  produce  of  the 
labor.  It  is  never  as  an  employer  of  labor  that  any  pro- 
ducer needs  capital;  when  he  does  need  capital,  it  is  be- 
cause he  is  not  only  an  employer  of  labor,  but  a  merchant 
or  speculator  in,  or  an  accumulator  of,  the  products  of 
labor.     This  is  generally  the  case  with  employers. 

To  recapitulate:  The  man  who  works  for  himself  gets 
his  wages  in  the  things  he  produces,  as  he  produces  them, 
and  exchanges  this  value  into  another  form  whenever 
he  sells  the  produce.  The  man  who  works  for  another 
for  stipulated  wages  in  money  works  under  a  contract  of 
exchange.  He  also  creates  his  wages  as  he  renders  his 
labor,  but  he  does  not  get  them  except  at  stated  times, 
in  stated  amounts,  and  in  a  different  form.  In  perform- 
ing the  labor  he  is  advancing  in  exchange;  when  he  gets 
his  wages  the  exchange  is  completed.  During  the  time 
he  is  earning  the  wages  he  is  advancing  capital  to  his 
employer,  but  at  no  time,  unless  wages  are  paid  before 
work  is  done,  is  the  employer  advancing  capital  to  him. 
Whether  the  employer  who  receives  this  produce  in  ex- 
change for  the  wages  immediately  re-exchanges  it,  or 
keeps  it  for  awhile,  no  more  alters  the  character  of  the 
transaction  than  does  the  final  disposition  of  the  product 
made  by  the  ultimate  receiver,  who  may,  perhaps,  be  in 
another  quarter  of  the  globe  and  at  the  end  of  a  series  of 
exchanges  numbering  hundreds. 


CHAPTER  IV, 

THE     MAINTENANCE    OF     LABORERS     NOT     DRAWN     FROM 

CAPITAL. 

But  a  stumbling  block  may  yet  remain,  or  may  recur, 
in  the  mind  of  the  reader. 

As  the  plowman  cannot  eat  the  furrow,  nor  a  partially 
completed  steam  engine  aid  in  any  way  in  producing  the 
clothes  the  machinist  wears,  have  I  not,  in  the  words  of 
John  Stuart  Mill,  ''forgotten  that  the  people  of  a  coun- 
try are  maintained  and  have  their  wants  supplied,  not 
by  the  produce  of  present  labor,  but  of  past?"  Or,  to 
use  the  language  of  a  popular  elementary  work — that  of 
Mrs.  Fawcett  — have  I  not  "forgotten  that  many 
months  must  elapse  between  the  sowing  of  the  seed  and 
the  time  when  the  produce  of  that  seed  is  converted  into 
a  loaf  of  bread,"  and  that  "it  is,  therefore,  evident  that 
laborers  cannot  live  upon  that  which  their  labor  is  assist- 
ing to  produce,  but  are  maintained  by  that  wealth  which 
their  labor,  or  the  labor  of  others,  has  previously  pro- 
duced, which  wealth  is  capital?"  * 

The  assumption  made  in  these  passages — the  assumption 
that  it  is  so  self-evident  that  labor  must  be  subsisted  from 
capital  that  the  proposition  has  but  to  be  stated  to  com- 
pel recognition — runs  through  the  whole  fabric  of  cur_ 
rent  political  economy.  And  so  confidently  is  it  held 
that  the  maintenance  of  labor  is  drawn  from  capital  that 

*  Political  Economy  for  Beginners,  by  Millicent  Garrett  Fawcett, 
Chap.  Ill,  p.  25. 


Chap.  IV.      LABORERS   NOT   MAINTAINED   BY   CAPITAL.  71 

the  proposition  that  "population  regulates  itself  by  the 
funds  which  are  to  employ  it,  and,  therefore,  always  in- 
creases or  diminishes  with  the  increase  or  diminution  of 
capital,"  *  is  regarded  as  equally  axiomatic,  and  in  its 
turn  made  the  basis  of  important  reasoning. 

Yet  being  resolved,  these  propositions  are  seen  to  be, 
not  self-evident,  but  absurd;  for  they  involve  the  idea 
that  labor  cannot  be  exerted  until  the  products  of  labor 
are  saved — thus  putting  the  product  before  the  producer. 

And  being  examined,  they  will  be  seen  to  derive  their 
apparent  plausibility  from  a  confusion  of  thought. 

I  have  already  pointed  out  the  fallacy,  concealed  by  an 
erroneous  definition,  which  underlies  the  proposition 
that  because  food,  raiment  and  shelter  are  necessary  to 
productive  labor,  therefore  industry  is  limited  by  capital. 
To  say  that  a  man  must  have  his  breakfast  before  going 
to  work  is  not  to  say  that  he  cannot  go  to  work  unless  a 
capitalist  furnishes  him  with  a  breakfast,  for  his  break- 
fast may,  and  in  point  of  fact  in  any  country  where  there 
is  not  actual  famine  will,  come  not  from  wealth  set  apart 
for  the  assistance  of  production,  but  from  wealth  set 
apart  for  subsistence.  And,  as  has  been  previously  shown, 
food,  clothing,  etc. — in  short,  all  articles  of  wealth — are 
only  capital  so  long  as  they  remain  in  the  possession  of 
those  who  propose,  not  to  consume,  but  to  exchange 
them  for  other  commodities  or  for  productive  services, 
and  cease  to  be  capital  when  they  pass  into  the  posses- 
sion of  those  who  will  consume  them;  for  in  that  trans- 
action they  pass  from  the  stock  of  wealth  held  for  the 
purpose  of  procuring  other  wealth,  and  pass  into  the 
stock  of  wealth  held  for  purposes  of  gratification,  irre- 
spective of  whether  their  consumption  will  aid  in  the 
production  of  wealth  or  not.  Unless  this  distinction  is 
preserved  it  is  impossible  to  draw  the  line  between  the 

*  The  words  quoted  are  Ricardo's  (Chap.  II);  but  the  idea  is  com- 
mon in  standard  works. 


72  WAGES   AKD   CAPITAL.  Book  1. 

wealth  that  is  capital  and  the  wealth  that  is  not  capital, 
even  by  remitting  the  distinction  to  the  "mind  of  the 
possessor,"  as  does  John  Stuart  Mill.  For  men  do  not 
eat  or  abstain,  wear  clothes  or  go  naked,  as  they  propose 
to  engage  in  productive  labor  or  not.  They  eat  because 
they  are  hungry,  and  wear  clothes  because  they  would  be 
uncomfortable  without  them.  Take  the  food  on  the 
breakfast  table  of  a  laborer  who  will  work  or  not  that  day 
as  he  gets  the  opportunity.  If  the  distinction  between 
capital  and  non-capital  be  the  support  of  productive 
labor,  is  this  food  capital  or  not?  It  is  as  impossible  for 
the  laborer  himself  as  for  any  philosopher  of  the  Eicardo- 
Mill  school  to  tell.  Nor  yet  can  it  be  told  when  it  gets 
into  his  stomach;  nor,  supposing  that  he  does  not  get 
work  at  first,  but  continues  the  search,  can  it  be  told 
until  it  has  passed  into  the  blood  and  tissues.  Yet  the 
man  will  eat  his  breakfast  all  the  same. 

But,  though  it  would  be  logically  sufficient,  it  is  hardly 
safe  to  rest  here  and  leave  the  argument  to  turn  on  the 
distinction  between  wealth  and  capital.  Nor  is  it  neces- 
sary. It  seems  to  me  that  the  proposition  that  present 
labor  must  be  maintained  by  the  produce  of  past  labor 
will  upon  analysis  prove  to  be  true  only  in  the  sense  that 
the  afternoon's  labor  must  be  performed  by  the  aid  of 
the  noonday  meal,  or  that  before  you  eat  the  hare  he 
must  be  caught  and  cooked.  And  this,  manifestly,  is 
not  the  sense  in  which  the  proposition  is  used  to  support 
the  important  reasoning  that  is  made  to  hinge  upon  it. 
That  sense  is,  that  before  a  work  which  will  not  immedi- 
ately result  in  wealth  available  for  subsistence  can  be 
carried  on,  there  must  exist  such  a  stock  of  subsistence 
as  will  support  the  laborers  during  the  process.  Let  us 
see  if  this  be  true: 

The  canoe  which  Robinson  Crusoe  made  with  such  in- 
finite toil  and  pains  was  a  production  in  which  his  labor 
could  not  yield  an  immediate  return.     But  was  it  neces- 


Chap.  IV.      LABORERS   NOT   MAINTAINED   BY   CAPITAL.  73 

sary  that,  before  he  commenced,  he  should  accumulate  a 
stock  of  food  sufficient  to  maintain  him  while  he  felled 
the  tree,  hewed  out  the  canoe,  and  finally  launched  her 
into  the  sea?  Not  at  all.  It  was  necessary  only  that  he 
should  dev.ote  part  of  his  time  to  the  procurement  of 
food  while  he  was  devoting  part  of  his  time  to  the  build- 
ing and  launching  of  the  canoe.  Or  supposing  a  hun- 
dred men  to  be  landed,  without  any  stock  of  provisions, 
in  a  new  country.  Will  it  be  necessary  for  them  to  ac- 
cumulate a  season's  stock  of  provisions  before  they  can 
begin  to  cultivate  the  soil?  Not  at  all.  It  will  be  neces- 
sary only  that  fish,  game,  berries,  etc.,  shall  be  so  abun- 
dant that  the  labor  of  a  part  of  the  hundred  may  suffice 
to  furnish  daily  enough  of  these  for  the  maintenance  of 
all,  and  that  there  shall  be  such  a  sense  of  mutual 
interest,  or  such  a  correlation  of  desires,  as  shall  lead 
those  who  in  the  present  get  the  food  to  divide  (ex- 
change) with  those  whose  efforts  are  directed  to  future 
recompense. 

What  is  true  in  these  cases  is  true  in  all  cases.  It  is 
not  necessary  to  the  production  of  things  that  cannot  be 
used  as  subsistence,  or  cannot  be  immediately  utilized, 
that  there  should  have  been  a  previous  production  of  the 
wealth  required  for  the  maintenance  of  the  laborers 
while  the  production  is  going  on.  It  is  only  necessary 
that  there  should  be,  somewhere  within  the  circle  of  ex- 
change, a  contemporaneous  production  of  sufficient  sub- 
sistence for  the  laborers,  and  a  willingness  to  exchange 
this  subsistence  for  the  thing  on  which  the  labor  is  being 
bestowed. 

And  as  a  matter  of  fact,  is  it  not  true,  in  any  normal 
condition  of  things,  that  consumption  is  supported  by 
contemporaneous  production? 

Here  is  a  luxurious  idler,  who  does  no  productive  work 
either  with  head  or  hand,  but  lives,  we  say,  upon  wealth 
which  his  father  left  him  securely  invested  in  govern- 


74  WAGES  AND  CAPITAL.  Book  I. 

ment  bonds.  Does  his  subsistence,  as  a  matter  of  fact, 
come  from  wealth  accumulated  in  the  past  or  from  the 
productive  labor  that  is  going  on  around  him?  On  his 
table  are  new-laid  eggs,  butter  churned  but  a  few  days 
before,  milk  which  the  cow  gave  this  morning,  fish  which 
twenty-four  hours  ago  were  swimming  in  the  sea,  meat 
which  the  butcher  boy  has  just  brought  in  time  to  be 
cooked,  vegetables  fresh  from  the  garden,  and  fruit  from 
the  orchard — in  short,  hardly  anything  that  has  not  re- 
cently left  the  hand  of  the  productive  laborer  (for  in  this 
category  must  be  included  transporters  and  distributors 
as  well  as  those  who  are  engaged  in  the  first  stages  of 
production),  and  nothing  that  has  been  produced  for  any 
considerable  length  of  time,  unless  it  may  be  some  bottles 
of  old  wine.  What  this  man  inherited  from  his  father, 
and  on  which  we  say  he  lives,  is  not  actually  wealth  at 
all,  but  only  the  power  of  commanding  wealth  as  others 
produce  it.  And  it  is  from  this  contemporaneous  pro- 
duction that  his  subsistence  is  drawn. 

The  fifty  square  miles  of  London  undoubtedly  contain 
more  wealth  than  within  the  same  space  anywhere  else 
exists.  Yet  were  productive  labor  in  London  absolutely 
to  cease,  within  a  few  hours  people  would  begin  to 
die  like  rotten  sheep,  and  within  a  few  weeks,  or  at  most 
a  few  months,  hardly  one  would  be  left  alive.  For  an 
entire  suspension  of  productive  labor  would  be  a  disaster 
more  dreadful  than  ever  yet  befell  a  beleaguered  city.  It 
would  not  be  a  mere  external  wall  of  circumvallation, 
such  as  Titus  drew  around  Jerusalem,  which  would  pre- 
vent the  constant  incoming  of  the  supplies  on  which  a 
great  city  lives,  but  it  would  be  the  drawing  of  a  similar 
wall  around  each  household.  Imagine  such  a  suspension 
of  labor  in  any  community,  and  you  will  see  how  true  it 
is  that  mankind  really  live  from  hand  to  mouth;  that  it 
is  the  daily  labor  of  the  community  that  supplies  the 
community  with  its  daily  bread. 


Chap.  IV.      LABORERS    NOT   MAINTAINED    BY    CAPITAL.  75 

Just  as  the  subsistence  of  the  laborers  who  built  the 
Pyramids  was  drawn  not  from  a  previously  hoarded 
stock,  but  from  the  constantly  recurring  crops  of  the  Nile 
Valley;  just  as  a  modern  government  when  it  undertakes 
a  great  work  of  years  does  not  appropriate  to  it  wealth 
already  produced,  but  wealth  yet  to  be  produced,  which 
is  taken  from  producers  in  taxes  as  the  work  progresses; 
so  it  is  that  the  subsistence  of  the  laborers  engaged  in 
production  which  does  not  directly  yield  subsistence 
comes  from  the  production  of  subsistence  in  which  others 
are  simultaneously  engaged. 

If  we  trace  the  circle  of  exchange  by  which  work  done 
in  the  production  of  a  great  steam  engine  secures  to  the 
worker  bread,  meat,  clothes  and  shelter,  we  shall  find 
that  though  between  the  laborer  on  the  engine  and  the 
producers  of  the  bread,  meat,  etc.,  there  may  be  a  thou- 
sand intermediate  exchanges,  the  transaction,  when  re- 
duced to  its  lowest  terms,  really  amounts  to  an  exchange 
of  labor  between  him  and  them.  Now  the  cause  which 
induces  the  expenditure  of  the  labor  on  the  engine  is 
evidently  that  some  one  who  has  power  to  give  what  is 
desired  by  the  laborer  on  the  engine  wants  in  exchange 
an  engine — that  is  to  say,  there  exists  a  demand  for  an 
engine  on  the  part  of  those  producing  bread,  meat,  etc., 
or  on  the  part  of  those  who  are  producing  what  the  pro- 
ducers of  the  bread,  meat,  etc.,  desire.  It  is  this  demand 
which  directs  the  labor  of  the  machinist  to  the  produc- 
tion of  the  engine,  and  hence,  reversely,  the  demand  of 
the  machinist  for  bread,  meat,  etc.,  really  directs  an 
equivalent  amount  of  labor  to  the  production  of  these 
things,  and  thus  his  labor,  actually  exerted  in  the  pro- 
duction of  the  engine,  virtually  produces  the  things  in 
which  he  expends  his  wages. 

Or,  to  formularize  this  principle: 

TJie  demand  for  consumption  determines  the  direction  in 
which  labor  will  be  expended  in  production. 


76  WAGES  AND   CAPITAL.  Book  I 

This  principle  is  so  simple  and  obvious  that  it  needs 
no  further  illustration,  yet  in  its  light  all  the  complexi- 
ties of  our  subject  disappear,  and  we  thus  reach  the  same 
view  of  the  real  objects  and  rewards  of  labor  in  the  intri- 
cacies of  modern  production  that  we  gained  by  observing 
in  the  first  beginnings  of  society  the  simpler  forms  of 
production  and  exchange.  We  see  that  now,  as  then, 
each  laborer  is  endeavoring  to  obtain  by  his  exertions  the 
satisfaction  of  his  own  desires;  we  see  that  although  the 
minute  division  of  labor  assigns  to  each  producer  the 
production  of  but  a  small  part,  or  perhaps  nothing  at  all,  of 
the  particular  things  he  labors  to  get,  yet,  in  aiding  in  the 
production  of  what  other  producers  want,  he  is  directing 
other  labor  to  the  production  of  the  things  he  wants — in 
effect,  producing  them  himself.  And  thus,  if  he  make 
jack-knives  and  eat  wheat,  the  wheat  is  really  as  much 
the  produce  of  his  labor  as  if  he  had  grown  it  for  himself 
and  left  wheat-growers  to  make  their  own  jack-knives. 

We  thus  see  how  thoroughly  and  completely  true  it 
is,  that  in  whatever  is  taken  or  consumed  by  laborers  in 
return  for  labor  rendered,  there  is  no  advance  of  capital 
to  the  laborers.  If  I  have  made  jack-knives,  and  with 
the  wages  received  have  bought  wheat,  I  have  simply  ex- 
changed jack-knives  for  wheat — added  jack-knives  to  the 
existing  stock  of  wealth  and  taken  wheat  from  it.  And 
as  the  demand  for  consumption  determines  the  direction 
in  which  labor  will  be  expended  in  production,  it  cannot 
even  be  said,  so  long  as  the  limit  of  wheat  production  has 
not  been  reached,  that  I  have  lessened  the  stock  of 
wheat,  for,  by  placing  jack-knives  in  the  exchangeable 
stock  of  wealth  and  taking  wheat  out,  I  have  determined 
labor  at  the  other  end  of  a  series  of  exchanges  to  the  pro- 
duction of  wheat,  just  as  the  wheat  grower,  by  putting  in 
wheat  and  demanding  jack-knives,  determined  labor  to 
the  production  of  jack-knives,  as  the  easiest  way  by 
which  wheat  could  be  obtained. 


Chap.  IV.      LABOREES  NOT  MAINTAINED   BY   CAPITAL.  77 

And  SO  the  man  who  is  following  the  plow — though 
the  crop  for  which  he  is  opening  the  ground  is  not  yet 
sown,  and  after  being  sown  will  take  months  to  arrive  at 
maturity — he  is  yet,  by  the  exertion  of  his  labor  in  plow- 
ing, virtually  producing  the  food  he  eats  and  the  wages 
he  receives.  For,  though  plowing  is  but  a  part  of  the 
operation  of  producing  a  crop,  it  is  a  part,  and  as  neces- 
sary a  part  as  harvesting.  The  doing  of  it  is  a  step  to- 
ward procuring  a  crop,  which,  by  the  assurance  which  it 
gives  of  the  future  crop,  sets  free  from  the  stock  con- 
stantly held  the  subsistence  and  wages  of  the  plowman. 
This  is  not  merely  theoretically  true,  it  is  practically  and 
literally  true.  At  the  proper  time  for  plowing,  let  plow- 
ing cease.  Would  not  the  symptoms  of  scarcity  at  once 
manifest  themselves  without  waiting  for  the  time  of  the 
harvest?  Let  plowing  cease,  and  would  not  the  effect  at 
once  be  felt  in  counting-room,  and  machine  shop,  and 
factory?  Would  not  loom  and  spindle  soon  stand  as  idle 
as  the  plow?  That  this  would  be  so,  we  see  in  the  effect 
which  immediately  follows  a  bad  season.  And  if  this 
would  be  so,  is  not  the  man  who  plows  really  producing 
his  subsistence  and  wages  as  much  as  though  during  the 
day  or  week  his  labor  actually  resulted  in  the  things  for 
which  his  labor  is  exchanged? 

As  a  matter  of  fact,  where  there  is  labor  looking  for 
employment,  the  want  of  capital  does  not  prevent  the 
owner  of  land  which  promises  a  crop  for  which  there  is  a 
demand  from  hiring  it.  Either  he  makes  an  agreement 
to  cultivate  on  shares,  a  common  method  in  some  parts 
of  the  United  States,  in  which  case  the  laborers,  if  they 
are  without  means  of  subsistence,  will,  on  the  strength 
of  the  work  they  are  doing,  obtain  credit  at  the  nearest 
store;  or,  if  he  prefers  to  pay  wages,  the  farmer  will  him- 
self obtain  credit,  and  thus  the  work  done  in  cultivation 
is  immediately  utilized  or  exchanged  as  it  is  done.  If 
an3^thLing  more  will  be  used  up  than  would  be  used  up  if 


78  WAGES   AND   CAPITAL.  BookL 

the  laborers  were  forced  to  beg  instead  of  to  work  (for  in 
any  civilized  country  during  a  normal  condition  of  things 
the  laborers  must  be  supported  anyhow),  it  will  be  the  re- 
serve capital  drawn  out  by  the  prospect  of  replacement,  and 
which  is  in  fact  replaced  by  the  work  as  it  is  done.  For 
instance,  in  the  purely  agricultural  districts  of  Southern 
California  there  was  in  1877  a  total  failure  of  the  crop, 
and  of  millions  of  sheep  nothing  remained  but  their 
bones.  In  the  great  San  Joaquin  Valley  were  many 
farmers  without  food  enough  to  support  their  families 
until  the  next  harvest  time,  let  alone  to  support  any 
laborers.  But  the  rains  came  again  in  proper  season, 
and  these  very  farmers  proceeded  to  hire  hands  to  plow 
and  to  sow.  For  every  here  and  there  was  a  farmer  who 
had  been  holding  back  part  of  his  crop.  As  soon  as  the 
rains  came  he  was  anxious  to  sell  before  the  next  harvest 
brought  lower  prices,  and  the  grain  thus  held  in  reserve, 
through  the  machinery  of  exchanges  and  advances, 
passed  to  the  use  of  the  cultivators — set  free,  in  effect 
produced,  by  the  work  done  for  the  next  crop. 

The  series  of  exchanges  which  unite  production  and 
consumption  may  be  likened  to  a  curved  pipe  filled  with 
water.  If  a  quantity  of  water  is  poured  in  at  one  end,  a 
like  quantity  is  released  at  the  other.  It  is  not  iden- 
tically the  same  water,  but  is  its  equivalenc.  And  so 
they  who  do  the  work  of  production  put  in  as  they  take 
out — they  receive  in  subsistence  and  wages  but  the  prod- 
uce of  their  labor. 


CHAPTER  V. 

THE   REAL   FUXCTIONS   OF   CAPITAL. 

It  may  now  be  asked.  If  capital  is  not  required  for  the 
payment  of  wages  or  the  support  of  labor  during  produc- 
tion, what,  then,  are  its  functions? 

The  previous  examination  has  made  the  answer  clear. 
Capital,  as  we  have  seen,  consists  of  wealth  used  for  the 
procurement  of  more  wealth,  as  distinguished  from 
wealth  used  for  the  direct  satisfaction  of  desire;  or,  as  I 
think  it  may  be  defined,  of  wealth  in  the  course  ol 
exchange. 

Capital,  therefore,  increases  the  power  of  labor  to  pro- 
duce wealth:  (1)  By  enabling  labor  to  apply  itself  in 
more  effective  ways,  as  by  digging  up  clams  with  a  spade 
instead  of  the  hand,  or  moving  a  vessel  by  shoveling  coal 
into  a  furnace,  instead  of  tugging  at  an  oar.  (2)  By  en- 
abling labor  to  avail  itself  of  the  reproductive  forces  of 
nature,  as  to  obtain  corn  by  sowing  it,  or  animals  by 
breeding  them.  (3)  By  permitting  the  division  of  labor, 
and  thus,  on  the  one  hand,  increasing  the  efficiency  of 
the  human  factor  of  wealth,  by  the  utilization  of  special 
capabilities,  the  acquisition  of  skill,  and  the  reduction  of 
waste;  and,  on  the  other,  calling  in  the  jjowers  of  the 
natural  factor  at  their  highest,  by  taking  advantage  of 
the  diversities  of  soil,  climate  and  situation,  so  as  to  ob- 
tain each  particular  species  of  wealth  where  nature  is 
most  favorable  to  its  production. 

Capital  does  not  supply  the  materials  which  labor 
works  up  into  wealth,  as  is  erroneously  taught;  the  ma- 


80  WAGES  AND   CAPITAL.  Book  I. 

terials  of  wealth  are  supplied  by  nature.  But  such  ma- 
terials partially  worked  up  and  in  the  course  of  exchange 
are  capital. 

Capital  does  not  supply  or  advance  wages,  as  is  erro- 
neously taught.  Wages  are  that  part  of  the  produce  of 
his  labor  obtained  by  the  laborer. 

Capital  does  not  maintain  laborers  during  the  progress 
of  their  work,  as  is  erroneously  taught.  Laborers  are 
maintained  by  their  labor,  the  man  who  produces,  in 
whole  or  in  part,  anything  that  will  exchange  for  articles 
of  maintenance,  virtually  producing  that  maintenance. 

Capital,  therefore,  does  not  limit  industry,  as  is  erro- 
neouly  taught,  the  only  limit  to  industry  being  the  access 
to  natural  material.  But  capital  may  limit  the  form  of 
industry  and  the  productiveness  of  industry,  by  limiting 
the  use  of  tools  and  the  division  of  labor. 

That  capital  may  limit  the  form  of  industry  is  clear. 
Without  the  factory,  there  could  be  no  factory  opera- 
tives; without  the  sewing  machine,  no  machine  sewing; 
without  the  plow,  no  plowman;  and  without  a  great  capi- 
tal engaged  in  exchange,  industry  could  not  take  the 
many  special  forms  which  are  concerned  with  exchanges. 
It  is  also  as  clear  that  the  want  of  tools  must  greatly 
limit  the  productiveness  of  industry.  If  the  farmer 
must  use  the  spade  because  he  has  not  capital  enough  for 
a  plow,  the  sickle  instead  of  the  reaping  machine,  the 
flail  instead  of  the  thresher;  if  the  machinist  must  rely 
upon  the  chisel  for  cutting  iron;  the  weaver  on  the  hand 
loom,  and  so  on,  the  productiveness  of  industry  cannot 
be  a  tithe  of  what  it  is  when  aided  by  capital  in  the  shape 
of  the  best  tools  now  in  use.  Nor  could  the  division  of 
labor  go  further  than  the  very  rudest  and  almost  imper- 
ceptible beginnings,  nor  the  exchanges  which  make  it 
possible  extend  beyond  the  nearest  neighbors,  unless  a 
portion  of  the  things  produced  were  constantly  kept  in 
stock   or    in   transit.     Even   the   pursuits   of  hunting, 


Chap.  V.  THE    REAL   FUNCTIONS   OF   CAPITAL.  81 

fishing,  gathering  nuts,  and  making  weapons  could  not 
be  specialized  so  that  an  individual  could  devote  himself 
to  any  one,  unless  some  part  of  what  was  procured  by  each 
was  reserved  from  immediate  consumption,  so  that  he 
who  devoted  himself  to  the  procurement  of  things  of  one 
kind  could  obtain  the  others  as  he  wanted  them,  and 
could  make  the  good  luck  of  one  day  supply  the  short- 
comings of  the  next.  While  to  permit  the  minute  sub- 
division of  labor  that  is  characteristic  of,  and  necessary  to, 
high  civilization,  a  great  amount  of  wealth  of  all  descrip- 
tions must  be  constantly  kept  in  stock  or  in  transit.  To 
enable  the  resident  of  a  civilized  community  to  exchange 
his  labor  at  option  with  the  labor  of  those  around  him 
and  with  the  labor  of  men  in  the  most  remote  parts  of 
the  globe,  there  must  be  stocks  of  goods  in  warehouses, 
in  stores,  in  the  holds  of  ships,  and  in  railway  cars,  just 
as  to  enable  the  denizen  of  a  great  city  to  draw  at  will 
a  cupful  of  water,  there  must  be  thousands  of  millions 
of  gallons  stored  in  reservoirs  and  moving  through  miles 
of  pipe. 

But  to  say  that  capital  may  limit  the  form  of  industry 
or  the  productiveness  of  industry  is  a  very  different  thing 
from  saying  that  capital  limits  industry.  For  the  dictum 
of  the  current  political  economy  that  "capital  limits  in- 
dustry," means  not  that  capital  limits  the  form  of  labor 
or  the  productiveness  of  labor,  but  that  it  limits  the  ex- 
ertion of  labor.  This  proposition  derives  its  plausibility 
from  the  assumption  that  capital  supplies  labor  with  ma- 
terials and  maintenance — an  assumption  that  we  have 
seen  to  be  unfounded,  and  which  is  indeed  transparently 
preposterous  the  moment  it  is  remembered  that  capital  is 
produced  by  labor,  and  hence  that  there  must  be  labor 
before  there  can  be  capital.  Capital  may  limit  the  form 
of  industry  and  the  productiveness  of  industry;  but  this 
is  not  to  say  that  there  could  be  no  industry  without  capi- 
tal, any  more  than  it  is  to  say  that  without  the  power 


83  WAGES  AND   CAPITAL.  Book  I. 

loom  there  could  be  no  weaving;  without  the  sewing 
machine  no  sewing;  no  cultivation  without  the  plow;  or 
that  in  a  community  of  one,  like  that  of  Robinson 
Crusoe,  there  could  be  no  labor  because  there  could  be 
no  exchange. 

And  to  say  that  capital  may  limit  the  form  and  pro- 
ductiveness of  industry  is  a  different  thing  from  saying 
that  capital  does.  For  the  cases  in  which  it  can  be  truly 
said  that  the  form  of  productiveness  of  the  industry  of  a 
community  is  limited  by  its  capital,  will,  I  think,  appear 
upon  examination  to  be  more  theoretical  than  real.  It  is 
evident  that  in  such  a  country  as  Mexico  or  Tunis  the 
larger  and  more  general  use  of  capital  would  greatly 
change  the  forms  of  industry  and  enormously  increase 
its  productiveness;  and  it  is  often  said  of  such  countries 
that  they  need  capital  for  the  development  of  their  re- 
sources. But  is  there  not  something  back  of  this — a 
want  which  includes  the  want  of  capital?  Is  it  not  the 
rapacity  and  abuses  of  government,  the  insecurity  of 
property,  the  ignorance  and  prejudice  of  the  people,  that 
prevent  the  accumulation  and  use  of  capital?  Is  not 
the  real  limitation  in  these  things,  and  not  in  the  want 
of  capital,  which  Avould  not  be  used  even  if  placed  there? 
We  can,  of  course,  imagine  a  community  in  which  the 
want  of  capital  would  be  the  only  obstacle  to  an  increased 
productiveness  of  labor,  but  it  is  only  by  imagining  a 
conjunction  of  conditions  that  seldom,  if  ever,  occurs, 
except  by  accident  or  as  a  passing  phase.  A  community 
in  which  capital  has  been  swept  away  by  war,  conflagra- 
tion, or  convulsion  of  nature,  and,  possibly,  a  community 
composed  of  civilized  people  just  settled  in  a  new  land, 
seem  to  me  to  furnish  the  only  examples.  Yet  how 
quickly  the  capital  habitually  used  is  reproduced  in  a 
community  that  has  been  swept  by  Avar,  has  long  been 
noticed,  while  the  rapid  production  of  the  capital  it  can. 


Chap.  V.  THE   REAL  FUNCTIONS  OF  CAPITAL.  83 

or  is  disposed  to  use,  is  equally  noticeable  in  the  case  of 
a  new  community. 

I  am  unable  to  think  of  any  other  than  such  rare  and 
passing  conditions  in  which  the  productiveness  of  labor 
is  really  limited  by  the  want  of  capital.  For,  although 
there  may  be  in  a  community  individuals  who  from  want 
of  capital  cannot  apply  their  labor  as  efficiently  as  they 
would,  yet  so  long  as  there  is  a  sufficiency  of  capital  in  the 
community  at  large,  the  real  limitation  is  not  the  want  of 
capital,  but  the  want  of  its  proper  distribution.  If  bad 
government  rob  the  laborer  of  his  capital,  if  unjust  laws 
take  from  the  producer  the  wealth  with  which  he  would 
assist  production,  and  hand  it  over  to  those  who  are  mere 
pensioners  upon  industry,  the  real  limitation  to  the 
effectiveness  of  labor  is  in  misgovernment,  and  not  in 
want  of  capital.  And  so  of  ignorance,  or  custom,  or 
other  conditions  which  prevent  the  use  of  capital.  It  is 
they,  not  the  want  of  capital,  that  really  constitute  the 
limitation.  To  give  a  circular  saw  to  a  Terra  del 
Fuegan,  a  locomotive  to  a  Bedouin  Arab,  or  a  sewing 
machine  to  a  Flathead  squaw,  would  not  be  to  add  to  the 
efficiency  of  their  labor.  Neither  does  it  seem  possible 
by  giving  anything  else  to  add  to  their  capital,  for  any 
wealth  beyond  what  they  had  been  accustomed  to  use  as 
capital  would  be  consumed  or  suffered  to  waste.  It  is 
not  the  want  of  seeds  and  tools  that  keeps  the  Apache 
and  the  Sioux  from  cultivating  the  soil.  If  provided 
with  seeds  and  tools  they  would  not  use  them  produc- 
tively unless  at  the  same  time  restrained  from  wandering 
and  taught  to  cultivate  the  soil.  If  all  the  capital  of  a 
London  were  given  them  in  their  present  condition,  it 
would  simply  cease  to  be  capital,  for  they  would  only  use 
productively  such  infinitesimal  part  as  might  assist  in 
the  chase,  and  would  not  even  use  that  until  all  the 
edible  part  of  the  stock  thus  showered  upon  them  had 
been    consumed.     Yet  such    capital  as  they    do    want 


84  WAGES  AND   CAPITAL.  Book  I. 

they  manage  to  acquire,  and  in  some  forms  in  spite  of 
the  greatest  diflBculties.  These  wild  tribes  hunt  and 
fight  -with  the  best  weapons  that  American  and  English 
factories  produce,  keeping  up  with  the  latest  improve- 
ments. It  is  only  as  they  became  civilized  that  they 
would  care  for  such  other  capital  as  the  civilized  state 
requires,  or  that  it  would  be  of  any  use  to  them. 

In  the  reign  of  George  IV.,  some  returning  mission- 
aries took  with  them  to  England  a  New  Zealand  chief 
called  Hongi.  His  noble  appearance  and  beautiful 
tatooing  attracted  much  attention,  and  when  about  to 
return  to  his  people  he  was  presented  by  the  monarch 
and  some  of  the  religious  societies  with  a  considerable 
stock  of  tools,  agricultural  instruments,  and  seeds. 
The  grateful  New  Zealander  did  use  this  capital  in  the 
production  of  food,  but  it  was  in  a  manner  of  which  his 
English  entertainers  little  dreamed.  In  Sydney,  on  his 
way  back,  he  exchanged  it  all  for  arms  and  ammunition, 
with  which,  on  getting  home,  he  began  war  against  an- 
other tribe  with  such  success  that  on  the  first  battle  field 
three  hundred  of  his  prisoners  were  cooked  and  eaten, 
Hongi  having  preluded  the  main  repast  by  scooping  out 
and  swallowing  the  eyes  and  sucking  the  warm  blood  of 
his  mortally  wounded  adversary,  the  opposing  chief.* 
But  now  that  their  once  constant  wars  have  ceased,  and 
the  remnant  of  the  Maoris  have  largely  adopted  European 
habits,  there  are  among  them  many  who  have  and  use 
considerable  amounts  of  capital. 

Likewise  it  would  be  a  mistake  to  attribute  the  simple 
modes  of  production  and  exchange  which  are  resorted  to 
in  new  communities  solely  to  a  want  of  capital.  These 
modes,  which  require  little  capital,  are  in  themselves 
rude  and  inefficient,  but  when  the  conditions  of  such 

*  New  Zealand  and  its  Inhabitants.     Rev.  Richard  Taylor.     Lon- 
don, 1855.     Chap.  XXI. 


Chap.  V.  THE    REAL   FUNCTIONS   OF   CAPITAL.  85 

communities  are  considered,  they  will  be  found  in  reality 
the  most  effective.  A  great  factory  with  all  the  latest 
improvements  is  the  most  efficient  instrument  that  has 
yet  been  devised  for  turning  wool  or  cotton  into  cloth, 
but  only  so  where  large  quantities  are  to  be  made.  The 
cloth  required  for  a  little  village  could  be  made  with  far 
less  labor  by  the  spinning  wheel  and  hand  loom.  A 
perfecting  press  will,  for  each  man  required,  print  many 
thousand  impressions  while  a  man  and  a  boy  would  be 
printing  a  hundred  with  a  Stanhope  or  Franklin  press; 
yet  to  work  off  the  small  edition  of  a  country  newspaper 
the  old-fashioned  press  is  by  far  the  most  efficient  ma- 
chine. To  carry  occasionally  two  or  three  passengers,  a 
canoe  is  a  better  instrument  than  a  steamboat;  a  few 
sacks  of  flour  can  be  transported  with  less  expenditure 
of  labor  by  a  pack  horse  than  by  a  railroad  train;  to  put 
a  great  stock  of  goods  into  a  cross-roads  store  in  the 
backwoods  would  be  but  to  waste  capital.  And,  gener- 
ally, it  will  be  found  that  the  rude  devices  of  joroduction 
and  exchange  which  obtain  among  the  sparse  populations 
of  new  countries  result  not  so  much  from  the  want  of 
capital  as  from  inability  profitably  to  employ  it. 

As,  no  matter  how  much  water  is  poured  in,  there  can 
never  be  in  a  bucket  more  than  a  bucketful,  so  no 
greater  amount  of  wealth  will  be  used  as  capital  than  is 
required  by  the  machinery  of  production  and  exchange 
that  under  all  the  existing  conditions — intelligence, 
habit,  security,  density  of  poj^ulation,  etc. — best  suit  the 
people.  And  I  am  inclined  to  think  that  as  a  general 
rule  this  amount  will  be  had — that  the  social  organism 
secretes,  as  it  were,  the  necessary  amount  of  capital  just 
as  the  human  organism  in  a  healthy  condition  secretes 
the  requisite  fat. 

But  whether  the  amount  of  capital  ever  does  limit  the 
productiveness  of  industry,  and  thus  fix  a  maximum 
which  wages  cannot  exceed,  it  is  evident  that  it  is  not 


86  WAGES  AND   CAPITAL. 


Book  1. 


from  any  scarcity  of  capital  that  the  poverty  of  the 
masses  in  civilized  countries  proceeds.  For  not  only  do 
wages  nowhere  reach  the  limit  fixed  by  the  productive- 
ness of  industry,  but  wages  are  relatively  the  lowest 
where  capital  is  most  abundant.  The  tools  and  machin- 
ery of  production  are  in  all  the  most  progressive  coun- 
tries evidently  in  excess  of  the  use  made  of  them,  and 
any  prospect  of  remunerative  employment  brings  out 
more  than  the  capital  needed.  The  bucket  is  not  only 
full;  it  is  overflowing.  So  evident  is  this,  that  not  only 
among  the  ignorant,  but  by  men  of  high  economic  repu- 
tation, is  industrial  depression  attributed  to  the  abun- 
dance of  machinery  and  the  accumulation  of  capital; 
and  war,  which  is  the  destruction  of  capital,  is  looked 
upon  as  the  cause  of  brisk  trade  and  high  wages — an  idea 
strangely  enough,  so  great  is  the  confusion  of  thought 
on  such  matters,  countenanced  by  many  who  hold  that 
capital  employs  labor  and  pays  wages. 


Our  purpose  in  this  inquiry  is  to  solve  the  problem  to 
which  so  many  self-contradictory  answers  are  given.  In 
ascertaining  clearly  what  capital  really  is  and  what  capi- 
tal really  does,  we  have  made  the  first,  and  an  all-impor- 
tant step.  But  it  is  only  a  first  step.  Let  us  recapitulate 
and  proceed. 

We  have  seen  that  the  current  theory  that  wages  de- 
pend upon  the  ratio  between  the  number  of  laborers  and 
the  amount  of  capital  devoted  to  the  employment  of 
labor  is  inconsistent  with  the  general  fact  that  wages  and 
interest  do  not  rise  and  fall  inversely,  but  conjointly. 

This  discrepancy  having  led  us  to  an  examination  of 
the  grounds  of  the  theory,  we  have  seen,  further,  that, 
contrary  to  the  current  idea,  wages  are  not  drawn  from 
capital  at  all,  but  come  directly  from  the  produce  of  the 
labor  for  which  they  are  paid.     We  have  seen  that  capi- 


Chap.  V.  RECAPITULATION",  87 

tal  does  not  advance  wages  or  subsist  laborers,  but  that 
its  functions  are  to  assist  labor  in  production  with  tools, 
seed,  etc.,  and  with  the  wealth  required  to  carry  on  ex- 
changes. 

"We  are  thus  irresistibly  led  to  practical  conclusions  so 
important  as  amply  to  justify  the  pains  taken  to  make 
sure  of  them. 

For  if  wages  aro  drawn,  not  from  capital,  but  from  the 
produce  of  labor,  the  current  theories  as  to  the  relations' 
of  capital  and  labor  are  invalid,  and  all  remedies,  whether 
proposed  by  professors  of  political  economy  or  working- 
men,  which  look  to  the  alleviation  of  poverty  either  by 
the  increase  of  capital  or  the  restriction  of  the  number 
of  laborers  or  the  efficiency  of  their  work,  must  be  con- 
demned. 

If  each  laborer  in  performing  the  labor  really  creates 
the  fund  from  which  his  wages  are  drawn,  then  wages 
cannot  be  diminished  by  the  increase  of  laborers,  but,  on 
the  contrary,  as  the  efficiency  of  labor  manifestly  increases 
with  the  number  of  laborers,  the  more  laborers,  other 
things  being  equal,  the  higher  should  wages  be. 

But  this  necessary  proviso,  "other  things  being  equal," 
brings  us  to  a  question  which  must  be  considered  and 
disposed  of  before  we  can  further  proceed.  That  ques- 
tion is.  Do  the  productive  powers  of  nature  tend  to 
diminish  with  the  increasing  drafts  made  upon  them  by 
increasing  population? 


BOOK  II. 

POPULATION  AND  SUBSISTENCE. 


CHAPTER       I. — THE     MALTHCSIAN"     THEORY,     ITS     GENESIS 

AND    SUPPORT. 
CHAPTER     II. — INFERENCES    FROM    FACTS. 
CHAPTER  III. — INFERENCES   FROM   ANALOGY. 
CHAPTER   IV. — DISPROOF   OF  THE   MALTHUSIAN   THEORY. 


Are  God  and  Nature  then  at  strife, 
That  Nature  lends  such  evil  dreams? 
So  careful  of  the  type  she  seems, 

So  careless  of  the  single  life. 

— Tennysoric 


CHAPTER    I. 

THE  MALTHUSIAN  THEORY,    ITS   GENESIS   AND   SUPPORT. 

Behind  the  theory  we  have  been  considering  lies  a 
theory  we  have  yet  to  consider.  The  current  doctrine  as 
to  the  derivation  and  law  of  wages  finds  its  strongest 
support  in  a  doctrine  as  generally  accepted — 'the  doctrine 
to  which  Malthus  has  given  his  name — that  population 
naturally  tends  to  increase  faster  than  subsistence. 
These  two  doctrines,  fitting  in  with  each  other,  frame 
the  answer  which  the  current  political  economy  gives  to 
the  great  problem  we  are  endeavoring  to  solve. 

In  what  has  preceded,  the  current  doctrine  that  wages 
are  determined  by  the  ratio  between  capital  and  laborers 
has,  I  think,  been  shown  to  be  so  utterly  baseless  as  to 
excite  surprise  as  to  how  it  could  so  generally  and  so 
long  obtain.  It  is  not  to  be  wondered  at  that  such  a 
theory  should  have  arisen  in  a  state  of  society  where  the 
great  body  of  laborers  seem  to  dej^end  for  employment 
and  wages  upon  a  separate  class  of  capitalists,  nor  yet 
that  under  these  conditions  it  should  have  maintained 
itself  among  the  masses  of  men,  who  rarely  take  the 
trouble  to  separate  the  real  from  the  apparent.  But  it 
is  surprising  that  a  theory  which  on  examination  appears 
to  be  so  groundless  could  have  been  successively  accepted 
by  so  many  acute  thinkers  as  have  during  the  present 
century  devoted  their  powers  to  the  elucidation  and 
development  of  the  science  of  political  economy. 

The  explanation  of  this  otherwise  unaccountable  fact 
is  to  be  found  in  the  general  acceptance  of  the  Malthu- 
sian  theory.  The  current  theory  of  wages  has  never 
been  fairly  put  upon  its  trial,  because,  backed  by  the 


92  POPULATION   AND   SUBSISTENCE.  Book  II. 

Malthusian  theory,  it  has  seemed  in  the  minds  of  polit- 
ical economists  a  self-evident  truth.  These  two  theories 
mutually  blend  with,  strengthen,  and  defend  each  other, 
while  they  both  derive  additional  support  from  a  princi- 
ple brought  prominently  forward  in  the  discussions  of 
the  theory  of  rent^viz.,  that  past  a  certain  point  the 
application  of  capital  and  labor  to  laud  yields  a  diminish- 
ing return.  Together  they  give  such  an  explanation  of 
the  phenomena  presented  in  a  highly  organized  and 
advancing  society  as  seems  to  fit  all  the  facts,  and  which 
has  thus  prevented  closer  investigation. 

Which  of  these  two  theories  is  entitled  to  historical 
precedence  it  is  hard  to  say.  The  theory  of  population 
was  not  formulated  in  such  a  way  as  to  give  it  the  stand- 
ing of  a  scientific  dogma  until  after  that  had  been  done 
for  the  theory  of  wages.  But  they  naturally  spring  up 
and  grow  with  each  other,  and  were  both  held  in  a  form 
more  or  less  crude  long  prior  to  any  attempt  to  construct 
a  system  of  political  economy.  It  is  evident,  from  several 
passages,  that  though  he  never  fully  developed  it,  the 
Malthusian  theory  was  in  rudimentary  form  present  in 
the  mind  of  Adam  Smith,  and  to  this,  it  seems  to  me, 
must  be  largely  due  the  misdirection  which  on  the  sub- 
ject of  wages  his  speculations  took.  But,  however  this 
may  be,  so  closely  are  the  two  theories  connected,  so 
completely  do  they  complement  each  other,  that  Buckle, 
reviewing  the  history  of  the  development  of  political 
economy  in  his  "Examination  of  the  Scotch  Intellect 
during  the  Eighteenth  Century,"  attributes  mainly  to 
Malthus  the  honor  of  "decisively  proving"  the  current 
theory  of  wages  by  advancing  the  current  theory  of  the 
pressure  of  population  upon  subsistence.  He  says  in 
his  "History  of  Civilization  in  England,"  Vol.  3,  Chap.  5: 

"  Scarcely  had  the  Eighteenth  Century  passed  away  when  it  was 
decisively  proved  that  the  reward  of  labor  depends  solely  on  two 
things;  namely,  the  magnitude  of  that  national  fund  out  of  which 


Chap.  1.  THE    MALTHUSIAN-   THEORY.  ,  93 

all  labor  is  paid,  and  the  number  of  laborers  among  whom  the  fund 
is  to  be  divided.  This  vast  step  in  our  knowledge  is  due,  mainly, 
though  not  entirely,  to  Malthus,  whose  work  on  population,  besides 
marking  an  epoch  in  the  history  of  speculative  thought,  has  already 
produced  considerable  practical  results,  and  will  probably  give  rise 
to  others  more  considerable  still.  It  was  published  in  1798;  so  that 
Adam  Smith,  who  died  in  1790,  missed  what  to  him  would  have 
been  the  intense  pleasure  of  seeing  how,  in  it,  his  own  views  were 
expanded  rather  than  corrected.  Indeed,  it  is  certain  that  without 
Smith  there  would  have  been  no  Malthus;  that  is,  unless  Smith  had 
laid  the  foundation,  Malthus  could  not  have  raised  the  super- 
structure." 

The  famous  doctrine  which  ever  since  its  enunciation 
has  so  powerfully  influenced  thought,  not  alone  in  the 
province  of  political  economy,  but  in  regions  of  even 
higher  speculation,  was  formulated  by  Malthus  in  the 
proposition  that,  as  shown  by  the  growth  of  the  North 
American  colonies,  the  natural  tendency  of  population 
is  to  double  itself  at  least  every  twenty-five  years,  thus 
increasing  in  a  geometrical  ratio,  while  the  subsistence 
that  can  be  obtained  from  land  ''under  circumstances 
the  most  favorable  to  human  industry  could  not  possibly 
be  made  to  increase  faster  than  in  an  arithmetical  ratio, 
or  by  an  addition  every  twenty-five  years  of  a  quantity 
equal  to  what  it  at  present  produces."  "The  necessary 
effects  of  these  two  different  rates  of  increase,  when 
brought  together,"  Mr.  Malthus  naively  goes  on  to  say, 
"will  be  very  striking."  And  thus  (Chap.  I)  he  brings 
them  together: 

"Let  us  call  the  population  of  this  island  eleven  millions;  and 
suppose  the  present  produce  equal  to  the  easy  support  of  such  a 
number.  In  the  first  twenty -five  years  the  population  would  be 
twenty-two  millions,  and  the  food  being  also  doubled,  the  means  of 
subsistence  would  be  equal  to  this  increase.  In  the  next  twenty -five 
years  the  population  would  be  forty-four  millions,  and  the  means  of 
subsistance  only  equal  to  the  support  of  thirty-three  millions.  In 
the  next  period  the  population  would  be  equal  to  eighty-eight  mil- 
lions, and  the  means  of  subsistence  just  equal  to  the  support  of  half 


94  POPULATION"  AKD   SUBSISTENCE.  Booh  II. 

that  number.  And  at  the  conclusion  of  the  first  century,  the  popu- 
lation would  be  a  hundred  and  seventy-six  millions,  and  the  means  of 
subsistence  only  equal  to  the  support  of  fifty-five  millions;  leaving  a 
population  of  a  hundred  and  twenty-one  millions  totally  unprovided 
for. 

"Taking  the  whole  earth  instead  of  this  island,  emigration  would 
of  course  be  excluded;  and  supposing  the  present  population  equal 
to  a  thousand  millions,  the  human  species  would  increase  as  the 
numbers  1,  2,  4,  8,  16,  33,  64,  128,  256,  and  subsistence  as  1,  2,  3,  4,  5, 
6,  7,  8,  9.  In  two  centuries  the  population  would  be  to  the  means 
of  subsistence  as  256  to  9;  in  three  centuries,  4,096  to  13,  and  in  two 
thousand  years  the  difference  would  be  almost  incalculable." 

Such  a  result  is  of  course  prevented  by  the  physical 
fact  that  no  more  people  can  exist  than  can  find  subsist- 
ence, and  hence  Malthus'  conclusion  is,  that  this  ten- 
dency of  population  to  indefinite  increase  must  be  held 
back  either  by  moral  restraint  upon  the  reproductive 
faculty,  or  by  the  various  causes  which  increase  mortality, 
which  he  resolves  into  vice  and  misery.  Such  causes  as 
prevent  propagation  he  styles  the  preventive  check; 
such  causes  as  increase  mortality  he  styles  the  positive 
check.  This  is  the  famous  Malthusian  doctrine,  as 
promulgated  by  Malthus  himself  in  the  "Essay  on  Popu- 
lation." 

It  is  not  worth  while  to  dwell  upon  the  fallacy  in- 
volved in  the  assumption  of  geometrical  and  arithmetical 
rates  of  increase,  a  play  upon  proportions  which  hardly 
rises  to  the  dignity  of  that  in  the  familiar  puzzle  of  the 
hare  and  the  tortoise,  in  which  the  hare  is  made  to  chase 
the  tortoise  through  all  eternity  without  coming  up  with 
him.  For  this  assumption  is  not  necessary  to  the  Mal- 
thusian doctrine,  or  at  least  is  expressly  repudiated  by 
some  of  those  who  fully  accept  that  doctrine;  as,  for  in- 
stance, John  Stuart  Mill,  who  speaks  of  it  as  "an  un- 
lucky attempt  to  give  precision  to  things  which  do  not 
admit  of  it,  which  every  person  capable  of    reasoning 


Chup.  I.  THE   MALTHUSIAN   THEORY.  95 

must  see  is  wholly  superfluous  to  the  argument."  *  The 
essence  of  the  Malthusian  doctrine  is,  that  population 
tends  to  increase  faster  than  the  power  of  providing  food, 
and  whether  this  difference  be  stated  as  a  geometrical 
ratio  for  population  and  an  arithmetical  ratio  for  subsist- 
ence, as  by  Malthus;  or  as  a  constant  ratio  for  popula- 
tion and  a  diminishing  ratio  for  subsistence,  as  by  Mill, 
is  only  a  matter  of  statement.  The  vital  point,  on 
which  both  agree,  is,  to  use  the  words  of  Mathus,  "that 
there  is  a  natural  tendency  and  constant  eifort  in  popu- 
lation to  increase  beyond  the  means  of  subsistence." 

The  Malthusian  doctrine,  as  at  present  held,  may  be 
thus  stated  in  its  strongest  and  least  objectionable  form: 

That  population,  constantly  tending  to  increase,  must, 
when  unrestrained,  ultimately  press  against  the  limits  of 
subsistence,  not  as  against  a  fixed,  but  as  against  an 
elastic  barrier,  which  makes  the  procurement  of  subsist- 
ence progressively  more  and  more  difficult.  And  thus, 
wherever  reproduction  has  had  time  to  assert  its  power, 
and  is  unchecked  by  prudence,  there  must  exist  that  de- 
gree of  want  which  will  keep  population  within  the 
bounds  of  subsistence. 

Although  in  reality  not  more  repugnant  to  the  sense 
of  harmonious  adaptation  by  creative  beneficence  and  wis- 
dom than  the  complacent  no-theory  which  throws  the 
responsibility  for  poverty  and  its  concomitants  upon  the 
inscrutable  decrees  of  Providence,  without  attempting  to 
trace  them,  this  theory,  in  avowedly  making  vice  and 
suffering  the  necessary  results  of  a  natural  instinct  with 

*  Principles  of  Political  Economy,  Book  II,  Chap.  IX.,  Sec.  VI. 
— Yet  notwithstanding  what  Mill  says,  it  is  clear  that  Malthus  him- 
self lays  great  stress  upon  his  geometrical  and  arithmetical  ratios, 
and  it  is  also  probable  that  it  is  to  these  ratios  that  Malthus  is  largely 
indebted  for  his  fame,  as  they  supplied  one  of  those  high-sounding 
formulas  that  with  many  people  carry  far  more  weight  than  the 
clearest  reasoning. 


96  POPULATION"   AND   SUBSISTENCE.  Booh  II. 

which  are  linked  the  purest  and  sweetest  affections, 
comes  rudely  in  collision  with  ideas  deeply  rooted  in  the 
human  mind,  and  it  was,  as  soon  as  formally  promul- 
gated, fought  with  a  bitterness  in  which  zeal  was  often 
more  manifest  than  logic.  But  it  has  triumphantly 
withstood  the  ordeal,  and  in  spite  of  the  refutations  of 
the  Godwins,  the  denunciations  of  the  Cobbetts,  and  all 
the  shafts  that  argument,  sarcasm,  ridicule,  and  senti- 
ment could  direct  against  it,  to-day  it  stands  in  the  world 
of  thought  as  an  accepted  truth,  which  compels  the 
recognition  even  of  those  who  would  fain  disbelieve  it. 

The  causes  of  its  triumph,  the  sources  of  its  strength, 
are  not  obscure.  Seemingly  backed  by  an  indisputable 
arithmetical  truth — that  a  continuously  increasing  popu- 
lation must  eventually  exceed  the  capacity  of  the  earth 
to  furnish  food  or  even  standing  room,  the  Malthusian 
theory  is  supported  by  analogies  in  the  animal  and  vege- 
table kingdoms,  where  life  everywhere  beats  wastefully 
against  the  barriers  that  hold  its  different  species  in 
check — analogies  to  which  the  course  of  modern  thought, 
in  leveling  distinctions  between  different  forms  of  life, 
has  given  a  greater  and  greater  weight;  and  it  is  appar- 
ently corroborated  by  many  obvious  facts,  such  as  the 
prevalence  of  poverty,  vice,  and  misery  amid  dense  pop- 
ulations; the  general  effect  of  material  progress  in  in- 
creasing population  without  relieving  pauperism;  the 
rapid  growth  of  numbers  in  newly  settled  countries  and 
the  evident  retardation  of  increase  in  more  densely  set- 
tled countries  by  the  mortality  among  the  class  con- 
demned to  want. 

The  Malthusian  theory  furnishes  a  general  principle 
which  accounts  for  these  and  similar  facts,  and  accounts 
for  them  in  a  way  which  harmonizes  with  the  doctrine 
that  wages  are  drawn  from  capital,  and  with  all  the  prin- 
ciples that  are  deduced  from  it.  According  to  the  cur- 
rent doctrine  of  wages,  wages  fall  as  increase  in  the  num- 


Chap.  I.  THE   MALTHUSIAN   THEORY.  97 

ber  of  laborers  necessitates  a  more  minute  division  of 
capital;  according  to  the  Malthusian  theory,  poverty 
appears  as  increase  in  population  necessitates  the  more 
minute  division  of  subsistence.  It  requires  but  the 
identification  of  capital  with  subsistence,  and  number  of 
laborers  with  population,  an  identification  made  in  the 
current  treatises  on  political  economy,  where  the  terms 
are  often  converted,  to  make  the  two  propositions  as 
identical  formally  as  they  are  substantially.*  And  thus 
it  is,  as  stated  by  Buckle  in  the  passage  previously 
quoted,  that  the  theory  of  population  advanced  by  Mal- 
thus  has  appeared  to  prove  decisively  the  theory  of  wages 
advanced  by  Smith. 

Eicardo,  who  a  few  years  subsequent  to  the  publica- 
tion of  the  "Essay  on  Population"  corrected  the  mistake 
into  which  Smith  had  fallen  as  to  the  nature  and  cause 
of  rent,  furnished  the  Malthusian  theory  an  additional 
support  by  calling  attention  to  the  fact  that  rent  would 
increase  as  the  necessities  of  increasing  population  forced 
cultivation  to  less  and  less  productive  lands,  or  to  less 
and  less  productive  points  on  the  same  lands,  thus  ex- 
plaining the  rise  of  rent.  In  this  way  was  formed  a 
triple  combination,  by  which  the  Malthusian  theory  has 
been  buttressed  on  both  sides — the  previously  received 
doctrine  of  wages  and  the  subsequently  received  doctrine 
of  rent  exhibiting  in  this  view  but  special  examples  of 
the  operation  of  the  general  principle  to  which  the  name 
of  Malthus  has  been  attached — the  fall  in  wages  and  th-e 
rise  in  rents  which  come  with  increasing  population 
being  but  modes  in  which  the  pressure  of  population 
upon  subsistence  shows  itself. 

Thus  taking  its  place  in  the  very  framework  of  polit- 

*  The  effect  of  the  Malthusian  doctrine  upon  the  definitions  of 
capital  may,  I  think,  be  seen  by  comparing  (see  pp.  33,  33,  34)  the  defi- 
nition of  Smith,  who  wrote  prior  to  Malthus,  with  the  definitions  of 
Ricardo,  McCulloch  and  Mill,  who  wrote  subsequently. 


98  POPULATION   AND    SUBSISTENCE.  Book  11. 

ical  economy  (for  the  science  as  currently  accepted  has 
undergone  no  material  change  or  improvement  since  the 
time  of  Eicardo,  though  in  some  minor  points  it  has  been 
cleared  and  illustrated),  the  Malthusian  theory,  though 
repugnant  to  sentiments  before  alluded  to,  is  not  repug- 
nant to  other  ideas,  which,  in  older  countries  at  least, 
generally  prevail  among  the  working  classes;  but,  on 
the  contrary,  like  the  theory  of  wages  by  which  it  is 
supported  and  in  turn  supports,  it  harmonizes  with 
them.  To  the  mechanic  or  operative  the  cause  of  low 
wages  and  of  the  inability  to  get  employment  is  obviously 
the  competition  caused  by  the  pressure  of  numbers,  and 
in  the  squalid  abodes  of  poverty  what  seems  clearer  than 
that  there  are  too  many  people? 

But  the  great  cause  of  the  triumph  of  this  theory  is, 
that,  instead  of  menacing  any  vested  right  or  antagoniz- 
ing any  powerful  interest,  it  is  eminently  soothing  and 
reassuring  to  the  classes  who,  wielding  the  power  of 
wealth,  largely  dominate  thought.  At  a  time  when  old 
supports  were  falling  away,  it  came  to  the  rescue  of  the 
special  privileges  by  which  a  few  monopolize  so  much 
of  the  good  things  of  this  world,  proclaiming  a  natural 
cause  for  the  want  and  misery  which,  if  attributed  to 
political  institutions,  must  condemn  every  government 
under  which  they  exist.  The  "Essay  on  Population" 
was  avowedly  a  reply  to  William  Godwin's  "Inquiry  con- 
cerning Political  Justice,"  a  work  asserting  the  principle 
of  human  equality;  and  its  purpose  was  to  justify  exist- 
ing inequality  by  shifting  the  responsibility  for  it  from 
human  institutions  to  the  laws  of  the  Creator.  There 
was  nothing  new  in  this,  for  Wallace,  nearly  forty  years 
before,  had  brought  forward  the  danger  of  excessive 
multiplication  as  the  answer  to  the  demands  of  justice 
for  an  equal  distribution  of  wealth;  but  the  circum- 
stances of  the  times  were  such  as  to  make  the  same  idea, 
when  brought  forward  by  Malthus,  peculiarly  grateful 


Chap.l.  THE   MALTHUSIAN"  THEORY.  99 

to  a  powerful  class,  in  whom  an  intense  fear  of  any  ques- 
tioning of  the  existing  state  of  things  had  been  generated 
by  the  outburst  of  the  French  Eevolution. 

Now,  as  then,  the  Malthusian  doctrine  parries  the  de- 
mand for  reform,  and  shelters  selfishness  from  question 
and  from  conscience  by  the  interposition  of  an  inevitable 
necessity.  It  furnishes  a  philosophy  by  which  Dives  as  he 
feasts  can  shut  out  the  image  of  Lazarus  who  faints  with 
hunger  at  his  door;  by  which  wealth  may  complacently  but- 
ton up  its  pocket  when  poverty  asks  an  alms,  and  the  rich 
Christian  bend  on  Sundays  in  a  nicely  upholstered  pew 
to  implore  the  good  gifts  of  the  All  Father  without  any 
feeling  of  responsibility  for  the  squalid  misery  that  is 
festering  but  a  square  away.  For  poverty,  want,  and 
starvation  are  by  this  theory  not  chargeable  either  to  in- 
dividual greed  or  to  social  mal-adjustments;  they  are 
the  inevitable  results  of  universal  laws,  with  which,  if  it 
were  not  impious,  it  were  as  hopeless  to  quarrel  as  with 
the  laAV  of  gravitation.  In  this  view,  he  who  in  the 
midst  of  want  has  accumulated  wealth,  has  but  fenced 
in  a  little  oasis  from  the  driving  sand  which  else  would 
have  overwhelmed  it.  He  has  gained  for  himself,  but 
has  hurt  nobody.  And  even  if  the  rich  were  literally  to 
obey  the  injunctions  of  Christ  and  divide  their  wealth 
among  the  poor,  nothing  would  be  gained.  Population 
would  be  increased,  only  to  press  again  upon  the  limits 
of  subsistence  or  capital,  and  the  equality  that  would  be 
produced  would  be  but  the  equality  of  common  misery. 
And  thus  reforms  which  would  interfere  with  the  inter- 
ests of  any  powerful  class  are  discouraged  as  hopeless. 
As  the  moral  law  forbids  any  forestalling  of  the  methods 
by  which  the  natural  law  gets  rid  of  surplus  population 
and  thus  holds  in  check  a  tendency  to  increase  potent 
enough  to  pack  the  surface  of  the  globe  with  human 
beings  as  sardines  are  packed  in  a  box,  nothing  can 
really  be  done,  either  by  individual   or  by  combined 


100  POPULATION   AND   SUBSISTENCE.  Book  n. 

effort,  to  extirpate  poverty,  save  to  trust  to  the  eflBcacy 
of  education  and  preach  the  necessity  of  prudence. 

A  theory  that,  falling  in  with  the  habits  of  thought  of 
the  poorer  classes,  thus  justifies  the  greed  of  the  rich 
and  the  selfishness  of  the  powerful,  will  spread  quickly 
and  strike  its  roots  deep.  This  has  been  the  case  with 
the  theory  advanced  by  Malthus. 

And  of  late  years  the  Malthusian  theory  has  received 
new  support  in  the  rapid  change  of  ideas  as  to  the  origin 
of  man  and  the  genesis  of  species.  That  Buckle  was 
right  in  saying  that  the  promulgation  of  the  Malthusian 
theory  marked  an  epoch  in  the  history  of  speculative 
thought  could,  it  seems  to  me,  be  easily  shown;  yet  to 
trace  its  influence  in  the  higher  domains  of  philosophy, 
of  which  Buckle's  own  work  is  an  example,  would, 
though  extremely  interesting,  carry  us  beyond  the  scope 
of  this  investigation.  But  how  much  be  reflex  and  how 
much  original,  the  support  which  is  given  to  the  Malthu- 
sian theory  by  the  new  philosophy  of  development,  now 
rapidly  spreading  in  every  direction,  must  be  noted  in 
any  estimate  of  the  sources  from  which  this  theory  de- 
rives its  present  strength.  As  in  political  economy,  the 
support  received  from  the  doctrine  of  wages  and  the 
doctrine  of  rent  combined  to  raise  the  Malthusian  theory 
to  the  rank  of  a  central  truth,  so  the  extension  of  similar 
ideas  to  the  development  of  life  in  all  its  forms  has  the 
effect  of  giving  it  a  still  higher  and  more  impregnable 
position.  Agassiz,  who,  to  the  day  of  his  death,  was  a 
strenuous  opponent  of  the  new  philosophy,  spoke  of 
Darwinism  as  "Malthus  all  over,"  *  and  Darwin  himself 
says  the  struggle  for  existence  "is  the  doctrine  of  Mal- 
thus applied  with  manifold  force  to  the  whole  animal  and 
vegetable  kingdoms."! 

*  Address  before  Massachusetts  State  Board  of  Agriculture,  1872. 
Report  XJ.  S.  Department  of  Agriculture,  1873, 
f  Origin  of  Species,  Chap.  III. 


Chap.  I.  THE   MALTHUSIAX   THEORY.  101 

It  does  not,  however,  seem  to  me  exactly  correct  to 
say  that  the  theory  of  development  by  natural  selection 
or  survival  of  the  fittest  is  extended  Malthusianism,  for 
the  doctrine  of  Malthus  did  not  originally  and  does  not 
necessarily  involve  the  idea  of  progression.  But  this  was 
soon  added  to  it.  McCulloch*  attributes  to  the  *'prin- 
cij)le  of  increase"  social  improvement  and  the  progress 
of  the  arts,  and  declares  that  the  poverty  that  it  engen- 
ders acts  as  a  powerful  stimulus  to  the  development  of 
industry,  the  extension  of  science  and  the  accumulation 
of  wealth  by  the  upper  and  middle  classes,  without  which 
stimulus  society  would  quickly  sink  into  apathy  and  de- 
cay. What  is  this  but  the  recognition  in  regard  to 
human  society  of  the  developing  effects  of  the  "struggle 
for  existence"  and  "survival  of  the  fittest,"  which  we 
are  now  told  on  the  authority  of  natural  science  have 
been  the  means  which  Nature  has  employed  to  bring 
forth  all  the  infinitely  diversified  and  wonderfully 
adapted  forms  which  the  teeming  life  of  the  globe  as- 
sumes? What  is  it  but  the  recognition  of  the  force, 
which,  seemingly  cruel  and  remorseless,  has  yet  in  the 
course  of  unnumbered  ages  developed  the  higher  from 
the  loAver  type,  differentiated  the  man  and  the  monkey, 
and  made  the  Nineteenth  Century  succeed  the  age  of 
stone? 

Thus  commended  and  seemingly  proved,  thus  linked 
and  buttressed,  the  Malthusian  theory — the  doctrine 
that  poverty  is  due  to  the  pressure  of  population  against 
subsistence,  or,  to  put  it  in  its  other  form,  the  doctrine 
that  the  tendency  to  increase  in  the  number  of  laborers 
must  always  tend  to  reduce  wages  to  the  minimum  on 
which  laborers  can  reproduce — is  now  generally  accepted 
as  an  unquestionable  truth,  in  the  light  of  which  social 
phenomena  are   to   be   explained,  just   as  for  ages  the 

*]Srote  IV.  to  Wealth  of  Nations. 


102  POPULATION  AND  SUBSISTENCE.  Book  II. 

phenomena  of  the  sidereal  heavens  were  explained  upon 
the  supposition  of  the  fixity  of  the  earth,  or  the  facts  of 
geology  upon  that  of  the  literal  inspiration  of  the  Mosaic 
record.  If  authority  were  alone  to  be  considered,  for- 
mally to  deny  this  doctrine  would  require  almost  as  much 
audacity  as  that  of  the  colored  preacher  who  recently 
started  out  on  a  crusade  against  the  opinion  that  the 
earth  moves  around  the  sun,  for  in  one  form  or  another, 
the  Malthusian  doctrine  has  received  in  the  intellectual 
world  an  almost  universal  indorsement,  and  in  the  best 
as  in  the  most  common  literature  of  the  day  may  be  seen 
cropping  out  in  every  direction.  It  is  indorsed  by 
economists  and  by  statesmen,  by  historians  and  by 
natural  investigators;  by  social  science  congresses  and 
by  trade  unions;  by  churchmen  and  by  materialists;  by 
conservatives  of  the  strictest  sect  and  by  the  most  radical 
of  radicals.  It  is  held  and  habitually  reasoned  from  by 
many  who  never  heard  of  Malthus  and  who  have  not  the 
slightest  idea  of  what  his  theory  is. 

Nevertheless,  as  the  grounds  of  the  current  theory  of 
wages  have  vanished  when  subjected  to  a  candid  exami- 
nation, so,  do  I  believe,  will  vanish  the  grounds  of  this, 
its  twin.  In  proving  that  wages  are  not  drawn  from 
capital  we  have  raised  this  Ant^us  from  the  earth. 


CHAPTER  11. 

INFERENCES   FROM   FACTS. 

The  general  acceptance  of  the  Malthusian  theory  and 
the  high  authority  by  which  it  is  indorsed  have  seemed 
to  me  to  make  it  expedient  to  review  its  grounds  and 
the  causes  which  have  conspired  to  give  it  such  a  domi- 
nating influence  in  the  discussion  of  social  questions. 

But  when  we  subject  the  theory  itself  to  the  test  of 
straightforward  analysis,  it  will,  I  think,  be  found  as 
utterly  untenable  as  the  current  theory  of  wages. 

In  the  first  place,  the  facts  which  are  marshaled  in 
support  of  this  theory  do  not  prove  it,  and  the  analogies 
do  not  countenance  it. 

And  in  the  second  place,  there  are  facts  which  con- 
clusively disprove  it. 

I  go  to  the  heart  of  the  matter  in  saying  that  there  is 
no  warrant,  either  in  experience  or  analogy,  for  the  as- 
sumption that  there  is  any  tendency  in  population  to 
increase  faster  than  subsistence.  The  facts  cited  to  show 
this  simply  show  that  where,  owing  to  the  sparseness  of 
population,  as  in  new  countries,  or  where,  owing  to  the 
unequal  distribution  of  wealth,  as  among  the  poorer 
classes  in  old  countries,  human  life  is  occupied  with  the 
physical  necessities  of  existence,  the  tendency  to  repro- 
duce is  at  a  rate  which  would,  were  it  to  go  on  un- 
checked, some  time  exceed  subsistence.  But  it  is  not  a 
legitimate  inference  from  this  that  the  tendency  to  re- 
produce would  show  itself  in  the  same  force  where  popu- 


104  POPULATION   AND   SUBSISTENCE.  Book  11. 

lation  was  sufficiently  dense  and  wealth  distributed  with 
sufficient  evenness  to  lift  a  whole  community  above  the 
necessity  of  devoting  their  energies  to  a  struggle  for  mere 
existence.  Nor  can  it  be  assumed  that  the  tendency  to 
reproduce,  by  causing  poverty,  must  prevent  the  exist- 
ence of  such  a  community;  for  this,  manifestly,  would 
be  assuming  the  very  point  at  issue,  and  reasoning  in  a 
circle.  And  even  if  it  be  admitted  that  the  tendency  to 
multiply  must  ultimately  produce  poverty,  it  cannot 
from  this  alone  be  predicated  of  existing  poverty  that  it 
is  due  to  this  cause,  until  it  be  shown  that  there  are  no 
other  causes  which  can  account  for  it — a  thing  in  the 
present  state  of  government,  laws,  and  customs,  mani- 
festly impossible. 

This  is  abundantly  shown  in  the  "Essay  on  Popula- 
tion" itself.  This  famous  book,  which  is  much  oftener 
spoken  of  than  read,  is  still  well  worth  perusal,  if  only 
as  a  literary  curiosity.  The  contrast  between  the  merits 
of  the  book  itself  and  the  effect  it  has  produced,  or  is  at 
least  credited  with  (for  though  Sir  James  Stewart,  Mr. 
Townsend,  and  others,  share  with  Malthus  the  glory  of 
discovering  "the  principle  of  population,"  it  was  the 
publication  of  the  "Essay  on  Population"  that  brought 
it  prominently  forward),  is,  it  seems  to  me,  one  of  the 
most  remarkable  things  in  the  history  of  literature;  and 
it  is  easy  to  understand  how  Godwin,  whose  "Political 
Justice"  provoked  the  "Essay  on  Population,"  should 
until  his  old  age  have  disdained  a  reply.  It  begins  with 
the  assumption  that  population  tends  to  increase  in  a 
geometrical  ratio,  while  subsistence  can  at  best  be  made 
to  increase  only  in  an  arithmetical  ratio — an  assumption 
just  as  valid,  and  no  more  so,  than  it  would  be,  from  the 
fact  that  a  puppy  doubled  the  length  of  his  tail  while  he 
added  so  many  pounds  to  his  weight,  to  assert  a  geomet- 
ric progression  of  tail  and  an  arithmetical  progression 
of  weight.     And,  the  inference  from  the  assumption  is 


Chap.  IL  INFEREJTCES  FROM  FACTS.  105 

just  such  as  Swift  in  satire  might  have  credited  to  the 
savans  of  a  previously  dogless  island,  who,  by  bringinc^ 
these  two  ratios  together,  might  deduce  the  very  *'strik- 
ing  consequence"  that  by  the  time  the  dog  grow  to  a 
weight  of  fifty  pounds  his  tail  would  be  over  a  mile  long, 
and  extremely  difficult  to  wag,  and  hence  recommend 
the  prudential  check  of  a  bandage  as  the  only  alterna- 
tive to  the  positive  check  of  constant  amputations. 
Commencing  with  such  an  absurdity,  the  essay  includes 
a  long  argument  for  the  imposition  of  a  duty  on  the  im- 
portation, and  the  payment  of  a  bounty  for  the  exporta- 
tion of  corn,  an  idea  that  has  long  since  been  sent  to  the 
limbo  of  exploded  fallacies.  And  it  is  marked  through- 
out the  argumentative  portions  by  passages  which  show 
on  the  part  of  the  reverend  gentleman  the  most  ridicu- 
lous incapacity  for  logical  thought — as,  for  instance, 
that  if  wages  were  to  be  increased  from  eighteen  pence 
or  two  shillings  per  day  to  five  shillings,  meat  would 
necessarily  increase  in  price  from  eight  or  nine  pence  to 
two  or  three  shillings  per  pound,  and  the  condition  of 
the  laboring  classes  would  therefore  not  be  improved,  a 
statement  to  which  1  can  think  of  no  parallel  so  close  as 
a  proposition  I  once  heard  a  certain  printer  gravely  ad- 
vance— that  because  an  author,  whom  he  had  known, 
was  forty  years  old  when  he  was  twenty,  the  author  must 
now  be  eighty  years  old  because  he  (the  printer)  was 
forty.  This  confusion  of  thought  does  not  merely  crop 
out  here  and  there;  it  characterizes  the  whole  work.* 

*  Malthus'  other  works,  though  written  after  he  became  famous, 
made  no  mark,  and  are  treated  with  contempt  even  by  those  who 
find  in  the  Essay  a  great  discovery.  The  Encyclopaedia  Britannica, 
for  instance,  though  fully  accepting  the  Malthusian  theory,  says  of 
Malthus'  Political  Economy:  "  It  is  very  ill  arranged,  and  is  in  no 
respect  either  a  practical  or  a  scientific  exposition  of  the  subject.  It 
is  in  great  part  occupied  with  an  examination  of  parts  of  Mr. 
Ricardo's  peculiar  doctrines,  and  with  an  inquiry  into  the  nature  and 


106  POPULATION  AND   SUBSISTENCE.  Book  n. 

The  main  body  of  the  book  is  taken  up  with  what  is  in 
reality  a  refutation  of  the  theory  which  the  book  ad- 
vances, for  Malthus'  review  of  what  he  calls  the  positive 
checks  to  population  is  simply  the  showing  that  the  re- 
sults which  he  attributes  to  over -population  actually 
arise  from  other  causes.  Of  all  the  cases  cited,  and 
pretty  much  the  whole  globe  is  passed  over  in  the  survey, 
in  which  vice  and  misery  check  increase  by  limiting  mar- 
riages or  shortening  the  term  of  human  life,  there  is  not 
a  single  case  in  which  the  vice  and  misery  can  be  traced 
to  an  actual  increase  in  the  number  of  mouths  over  the 
power  of  the  accompanying  hands  to  feed  them;  but  in 
every  case  the  vice  and  misery  are  shown  to  spring  either 
from  unsocial  ignorance  and  rapacity,  or  from  bad  gov- 
ernment, unjust  laws  or  destructive  warfare. 

Nor  what  Malthus  failed  to  show  has  any  one  since 
him  shown.  The  globe  may  be  surveyed  and  history 
may  be  reviewed  in  vain  for  any  instance  of  a  considera- 
ble country*  in  which  poverty  and  want  can  be  fairly 
attributed  to  the  pressure  of  an  increasing  population. 
Whatever  be  the  possible  dangers  involved  in  the  power 
of  human  increase,  they  have  never  yet  appeared.  What- 
ever may  some  time  be,  this  never  yet  has  been  the  evil 
that  has  afflicted  mankind.     Population  always  tending 

causes  of  value.  Nothing,  however,  can  be  more  unsatisfactory  than 
these  discussions.  In  truth  Mr.  Malthus  never  had  any  clear  or 
accurate  perception  of  Mr.  Ricardo's  theories,  or  of  the  principles 
which  determine  the  value  in  exchange  of  different  articles." 

*  I  say  considerable  country,  because  there  may  be  small  islands, 
such  as  Pitcairn's  Island,  cut  off  from  communication  with  the  rest 
of  the  world  and  consequently  from  the  exchanges  which  are  nec- 
essary to  the  improved  modes  of  production  resorted  to  as  population 
becomes  dense,  which  may  seem  to  offer  examples  in  point.  A 
moment's  reflection,  however,  will  show  that  these  exceptional  cases 
are  not  in  point. 


Chap.  II.  INFERENCES   FROM   FACTS.  107 

to  overpass  the  limit  of  subsistence!  How  is  it,  then, 
that  this  globe  of  ours,  after  all  the  thousands,  and  it  is 
now  thought  millions,  of  years  that  man  has  been  upon 
the  earth,  is  yet  so  thinly  populated?  How  is  it,  then, 
that  so  many  of  the  hives  of  human  life  are  now  deserted 
— that  once  cultivated  fields  are  rank  with  jungle,  and 
the  wild  beast  licks  her  cubs  where  once  were  busy 
haunts  of  men? 

It  is  a  fact,  that,  as  we  count  our  increasing  millions, 
we  are  apt  to  lose  sight  of — nevertheless  it  is  a  fact — that 
in  what  we  know  of  the  world's  history  decadence  of 
population  is  as  common  as  increase.  Whether  the 
aggregate  population  of  the  earth  is  now  greater  than  at 
any  previous  epoch  is  a  speculation  which  can  deal  only 
with  guesses.  Since  Montesquieu,  in  the  early  part  of 
the  last  century,  asserted,  what  was  then  probably  the 
prevailing  impression,  that  the  population  of  the  earth 
had,  since  the  Christian  era,  greatly  declined,  opinion 
has  run  the  other  way.  But  the  tendency  of  recent  in- 
vestigation and  exploration  has  been  to  give  greater 
credit  to  what  have  been  deemed  the  exaggerated  accounts 
of  ancient  historians  and  travelers,  and  to  reveal  indica- 
tions of  denser  populations  and  more  advanced  civiliza- 
tions than  had  before  been  suspected,  as  well  as  of  a 
higher  antiquity  in  the  human  race.  And  in  basing  our 
estimates  of  population  upon  the  development  of  trade, 
the  advance  of  the  arts,  and  the  size  of  cities,  we  are  apt 
to  underrate  the  density  of  population  which  the  inten- 
sive cultivations,  characteristic  of  the  earlier  civiliza- 
tions, are  capable  of  maintaining — especially  where  irri- 
gation is  resorted  to.  As  we  may  see  from  the  closely 
cultivated  districts  of  China  and  Europe  a  very  great 
population  of  simple  habits  can  readily  exist  with  very 
little  commerce  and  a  much  lower  stage  of  those  arts  in 
which  modern  progress  has  been  most  marked,  and  with- 


108  POPULATION   AND   SUBSISTENCE.  Book  11. 

out  that  tendency  to  concentrate  in  cities  which  modern 
populations  show.* 

Be  this  as  it  may,  the  only  continent  which  we  can  be 
sure  now  contains  a  larger  population  than  ever  before  is 
Europe.  But  this  is  not  true  of  all  parts  of  Europe. 
Certainly  Greece,  the  Mediterranean  Islands,  and  Turkey 
in  Europe,  probably  Italy,  and  possibly  Spain,  have  con- 
tained larger  populations  than  now,  and  this  may  be 
likewise  true  of  Northwestern  and  parts  of  Central  and 
Eastern  Europe. 

America  also  has  increased  in  population  during  the 
time  we  know  of  it;  but  this  increase  is  not  so  great  as  is 
popularly  supposed,  some  estimates  giving  to  Peru  alone 
at  the  time  of  the  discovery  a  greater  population  than 
now  exists  on  the  whole  continent  of  South  America. 
And  all  the  indications  are  that  previous  to  the  discovery 
the  population  of  America  had  been  declining.  "What 
great  nations  have  run  their  course,  what  empires  have 
arisen  and  fallen  in  "that  new  world  which  is  the  old," 
we  can  only  imagine.  But  fragments  of  massive  ruins  yet 
attest  a  grander  pre-Incan  civilization;  amid  thetroj)ical 
forests  of  Yucatan  and  Central  America  are  the  remains  of 
great  cities  forgotten  ere  the  Spanish  conquest;  Mexico,  as 
Cortez  found  it,  showed  the  superimposition  of  barbarism 
upon  a  higher  social  development,  while  through  a  great 

*  As  may  be  seen  from  the  map  in  H.  H.  Bancroft's  "Native 
Races,"  the  State  of  Vera  Cruz  is  not  one  of  those  parts  of  Mexico 
noticeable  for  its  antiquities.  Yet  Hugo  Fink,  of  Cordova,  writing 
to  the  Smithsonian  Institute  (Reports  1870),  says  there  is  hardly  a 
foot  in  the  whole  State  in  which  by  excavation  either  a  broken 
obsidian  knife  or  a  broken  piece  of  pottery  is  not  found;  that  the 
whole  country  is  intersected  with  parallel  lines  of  stones  intended  to 
keep  the  earth  from  washing  away  in  the  rainy  season,  which  show 
that  even  the  very  poorest  land  was  put  into  requisition,  and  that  it 
is  impossible  to  resist  the  conclusion  that  the  ancient  population 
was  at  least  as  dense  as  it  is  at  present  in  the  most  populous  districts 
of  Europe. 


Chap.n.  INFERENCES  FROM  FACTS.  109 

part  of  what  is  now  the  United  States  are  scattered 
mounds  which  prove  a  once  relatively  dense  population, 
and  here  and  there,  as  in  the  Lake  Superior  copper 
mines,  are  traces  of  higher  arts  than  were  known  to  the 
Indians  with  whom  the  whites  came  in  contact. 

As  to  Africa  there  can  be  no  question.  Northern  Af- 
rica can  contain  but  a  fraction  of  the  population  that 
it  had  in  ancient  times;  the  Nile  Valley  once  held  an  enor- 
mously greater  population  than  now,  while  south  of  the 
Sahara  there  is  nothing  to  show  increase  within  historic 
times,  and  widespread  depopulation  was  certainly  caused 
by  the  slave  trade. 

As  for  Asia,  which  even  now  contains  more  than  half 
the  human  race,  though  it  is  not  much  more  than  half 
as  densely  populated  as  Europe,  there  are  indications 
that  both  India  and  China  once  contained  larger  popula- 
tions than  now,  while  that  great  breeding  ground  of  men 
from  which  issued  swarms  that  overran  both  countries 
and  sent  great  waves  of  people  rolling  upon  Europe, 
must  have  been  once  far  more  populous.  But  the  most 
marked  change  is  in  Asia  Minor,  Syria,  Babylonia, 
Persia,  and  in  short  that  vast  district  which  yielded  to 
the  conquering  arms  of  Alexander.  Where  were  once 
great  cities  and  teeming  populations  are  now  squalid 
villages  and  barren  wastes. 

It  is  somewhat  strange  that  among  all  the  theories 
that  have  been  raised,  that  of  a  fixed  quantity  to  human 
life  on  this  earth  has  not  been  broached.  It  would  at 
least  better  accord  with  historical  facts  than  that  of  the 
constant  tendency  of  population  to  outrun  subsistence. 
It  is  clear  that  population  has  here  ebbed  and  there 
flowed;  its  centers  have  changed;  new  nations  have 
arisen  and  old  nations  declined;  sparsely  settled  districts 
have  become  populous  and  populous  districts  have  lost 
their  population;  but  as  far  back  as  we  can  go  without 
abandoning  ourselves  wholly  to  inference,  there  is  noth- 


110  POPULATION"  AND  SUBSISTENCE.  Book  n. 

ing  to  show  continuous  increase,  or  even  clearly  to 
show  an  aggregate  increase  from  time  to  time.  The 
advance  of  the  pioneers  of  peoples  has,  so  far  as  we  can 
discern,  never  been  into  uninhabited  lands — their  march 
has  always  been  a  battle  with  some  other  people  pre- 
viously in  possession;  behind  dim  empires  vaguer  ghosts 
of  empire  loom.  That  the  population  of  the  world  must 
have  had  its  small  beginnings  we  confidently  infer,  for 
we  know  that  there  was  a  geologic  era  when  human  life 
could  not  have  existed,  and  we  cannot  believe  that  men 
sprang  up  all  at  once,  as  from  the  dragon  teeth  sowed  by 
Cadmus;  yet  through  long  vistas,  where  history,  tradi- 
tion and  antiquities  shed  a  light  that  is  lost  in  faint  glim- 
mers, we  may  discern  large  populations.  And  during 
these  long  periods  the  principle  of  population  has  not 
been  strong  enough  fully  to  settle  the  world,  or  even  so 
far  as  we  can  clearly  see  materially  to  increase  its  aggre- 
gate population.  Compared  with  its  capacities  to  sup- 
port human  life  the  earth  as  a  whole  is  yet  most  sparsely 
populated. 

There  is  another  broad,  general  fact  which  cannot  fail 
to  strike  any  one  who,  thinking  of  this  subject,  extends 
his  view  beyond  modern  society.  Malthusianism  pred- 
icates a  universal  law — that  the  natural  tendency  of  popu- 
lation is  to  outrun  subsistence.  If  there  be  such  a  law, 
it  must,  wherever  population  has  attained  a  certain 
density,  become  as  obvious  as  any  of  the  great  natural 
laws  which  have  been  everywhere  recognized.  How  is 
it,  then,  that  neither  in  classical  creeds  and  codes,  nor  in 
those  of  the  Jews,  the  Egyptians,  the  Hindoos,  the 
Chinese,  nor  any  of  the  peoples  who  have  lived  in  close 
association  and  have  built  up  creeds  and  codes,  do  we 
find  any  injunctions  to  the  practice  of  the  prudential 
restraints  of  Malthus;  but  that,  on  the  contrary,  the  wis- 
dom of  the  centuries,  the  religions  of  the  world,  have 
always  inculcated  ideas  of  civic  and  religious  duty  the 


Chap.  11.  INFEEENCES   FROM    FACTS.  Ill 

very  reverse  of  those  which  the  current  political  econ- 
omy enjoins,  and  which  Annie  Besant  is  now  trying  to 
popularize  in  England? 

And  it  must  be  remembered  that  there  have  been 
societies  in  which  the  community  guaranteed  to  every 
member  employment  and  subsistence.  John  Stuart  Mill 
says  (Book  II,  Chap.  XII,  Sec.  2),  that  to  do  this  with- 
out state  regulation  of  marriages  and  births,  would  be  to 
produce  a  state  of  general  misery  and  degradation. 
"These  consequences,"  he  says,  "have  been  so  often  and 
so  clearly  pointed  out  by  authors  of  reputation  that 
ignorance  of  them  on  the  part  of  educated  persons  is  no 
longer  pardonable."  Yet  in  Sparta,  in  Peru,  in  Para- 
guay, as  in  the  industrial  communities  which  appear 
almost  everywhere  to  have  constituted  the  primitive 
agricultural  organization,  there  seems  to  have  been  an 
utter  ignorance  of  these  dire  consequences  of  a  natural 
tendency. 

Besides  the  broad,  general  facts  I  have  cited,  there  are 
facts  of  common  knowledge  which  seem  utterly  inconsist- 
ent with  such  an  overpowering  tendency  to  multiplica- 
tion. If  the  tendency  to  reproduce  be  so  strong  as  Mal- 
thusianism  supposes,  how  is  it  that  families  so  often  be- 
come extinct — families  in  which  want  is  unknown?  How 
is  it,  then,  that  when  every  premium  is  offered  by  heredi- 
tary titles  and  hereditary  possessions,  not  alone  to  the 
principle  of  increase,  but  to  the  preservation  of  genea- 
logical knowledge  and  the  proving  up  of  descent,  that 
in  such  an  aristocracy  as  that  of  England,  so  many  peer- 
ages should  lapse,  and  the  House  of  Lords  be  kept  up 
from  century  to  century  only  by  fresh  creations? 

For  the  solitary  example  of  a  family  that  has  survived 
any  great  lapse  of  time,  even  though  assured  of  subsist- 
ence and  honor,  we  must  go  to  unchangeable  China. 
The  descendants  of  Confucius  still  exist  there,  and  enjoy 
peculiar  privileges  and  consideration,  forming,  in  fact. 


112  POPULATION   AND   SUBSISTENCE.  Book  II. 

the  only  hereditary  aristocracy.  On  the  presumption 
that  population  tends  to  double  every  twenty-five  years, 
they  should,  in  2,150  years  after  the  death  of  Confucius, 
have  amounted  to  859,559,193,106,709,670,198,710,528 
souls.  Instead  of  any  such  unimaginable  number,  the  de- 
scendants of  Confucius,  2,150  years  after  his  death,  in  the 
reign  of  Kanghi,  numbered  11,000  males,  or  say  22,000 
souls.  This  is  quite  a  discrepancy,  and  is  the  more  strik- 
ing when  it  is  remembered  that  the  esteem  in  which  this 
family  is  held  on  account  of  their  ancestor,  "the  Most 
Holy  Ancient  Teacher,"  has  prevented  the  operation  of 
the  positive  check,  while  the  maxims  of  Confucius  incul- 
cate anything  but  the  prudential  check. 

Yet,  it  may  be  said,  that  even  this  increase  is  a  great 
one.  Twenty-two  thousand  persons  descended  from  a 
single  pair  in  2,150  years  is  far  short  of  the  Malthusian 
rate.  Nevertheless,  it  is  suggestive  of  possible  over- 
crowding. 

But  consider.  Increase  of  descendants  does  not  show 
increase  of  population.  It  could  only  do  this  when  the 
breeding  was  in  and  in.  Smith  and  his  wife  have  a  son 
and  daughter,  who  marry  respectively  some  one  else's 
daughter  and  son,  and  each  have  two  children.  Smith 
and  his  wife  would  thus  have  four  grandchildren;  but 
there  would  be  in  the  one  generation  no  greater  number 
than  in  the  other — each  child  would  have  four  grand- 
parents. And  supposing  this  process  were  to  go  on,  the 
line  of  descent  might  constantly  spread  out  into  hun- 
dreds, thousands  and  millions;  but  in  each  generation  of 
descendants  there  would  be  no  more  individuals  than  in 
any  previous  generation  of  ancestors.  The  web  of  gener- 
ations is  like  lattice-work  or  the  diagonal  threads  in 
cloth.  Commencing  at  any  point  at  the  top,  the  eye  fol- 
lows lines  which  at  the  bottom  widely  diverge;  but  be- 
ginning at  any  point  at  the  bottom,  the  lines  diverge  in 
the  same  way  to  the  top.     How  many  children  a  man 


Chap.  II.  IN"FERE]^CES    FROM   FACTS.  113 

may  have  is  problematical.  But  that  he  had  two  parents 
is  certain,  and  that  these  again  had  two  parents  each 
is  also  certain.  Follow  this  geometrical  progression 
through  a  few  generations  and  see  if  it  does  not  lead  to 
quite  as  "striking  consequences"  as  Mr.  Malthus'  peo- 
pling of  the  solar  systems. 

But  from  such  considerations  as  these  let  us  advance 
to  a  more  definite  inquiry.  I  assert  that  the  cases  com- 
monly cited  as  instances  of  over-population  will  not  bear 
investigation.  India,  China,  and  Ireland  furnish  the 
strongest  of  these  cases.  In  each  of  these  countries, 
large  numbers  have  perished  by  starvation  and  large 
classes  are  reduced  to  abject  misery  or  compelled  to 
emigrate.     But  is  this  really  due  to  over-population? 

Comparing  total  population  with  total  area,  India  and 
China  are  far  from  being  the  most  densely  populated 
countries  of  the  world.  According  to  the  estimates  of 
MM.  Behm  and  Wagner,  the  population  of  India  is  but 
132  to  the  square  mile  and  that  of  China  119,  whereas 
Saxony  has  a  population  of  443  to  the  square  mile;  Bel- 
gium 441;  England  423;  the  Netherlands  391;  Italy  234 
and  Japan  233.*  There  are  thus  in  both  countries  large 
areas  unused  or  not  fully  used,  but  even  in  their  more 
densely  populated  districts  there  can  be  no  doubt  that 
either  could  maintain  a  much  greater  jjopulation  in  a 
much  higher  degree  of  comfort,  for  in  both  countries  is 
labor  applied  to  production  in  the  rudest  and  most  in- 
efficient ways,  and  in  both  countries  great  natural  re- 
sources are  wholly  neglected.     This  arises  from  no  innate 

*I  take  these  figures  from  the  Smithsonian  Report  for  1873, 
leaving  out  decimals.  MM.  Behm  and  Wagner  put  the  population 
of  China  at  446,500,000,  though  there  are  some  who  contend  that  it 
does  not  exceed  150,000,000.  They  put  the  population  of  Hither 
India  at  206,225,580,  giving  132.39  to  the  square  mile;  of  Ceylon  at 
2,405,287  or  97. 36  to  the  square  mile;  of  Further  India  at  21,018,062, 
or  27.94  to  the  square  mile.  They  estimate  the  population  of  the 
world  at  1,377,000,000,  an  average  of  26.64  to  the  square  mile. 


114  POPULATION  AND  SUBSISTENCE.  Book  II. 

deficiency  in  the  people,  for  the  Hindoo,  as  comparative 
philology  has  shown,  is  of  our  own  blood,  and  China  pos- 
sessed a  high  degree  of  civilization  and  the  rudiments  of 
the  most  important  modern  inventions  when  our  ances- 
tors were  wandering  savages.  It  arises  from  the  form 
which  the  social  organization  has  in  both  countries  taken, 
which  has  shackled  productive  power  and  robbed  indus- 
try of  its  reward. 

In  India  from  time  immemorial,  the  working  classes 
have  been  ground  down  by  exactions  and  oppressions  into 
a  condition  of  helpless  and  hopeless  degradation.  For 
ages  and  ages  the  cultivator  of  the  soil  has  esteemed 
himself  happy  if,  of  his  produce,  the  extortion  of  the 
strong  hand  left  him  enough  to  support  life  and  furnish 
seed;  capital  could  nowhere  be  safely  accumulated  or  to 
any  considerable  extent  be  used  to  assist  production;  all 
wealth  that  could  be  wrung  from  the  people  was  in  the 
possession  of  princes  who  were  little  better  than  robber 
chiefs  quartered  on  the  country,  or  in  that  of  their 
farmers  or  favorites,  and  was  wasted  in  useless  or  worse 
than  useless  luxury,  while  religion,  sunken  into  an  elab- 
orate and  terrible  superstition,  tyrannized  over  the  mind 
as  physical  force  did  over  the  bodies  of  men.  Under 
these  conditions,  the  only  arts  that  could  advance  were 
those  that  ministered  to  the  ostentation  and  luxury  of 
the  great.  The  elephants  of  the  rajah  blazed  with  gold 
of  exquisite  workmanship,  and  the  umbrellas  that  sym- 
bolized his  regal  power  glittered  with  gems;  but  the  plow 
of  the  ryot  was  only  a  sharpened  stick.  The  ladies  of 
the  rajah's  harem  wrapped  themselves  in  muslins  so  fine 
as  to  take  the  name  of  woven  wind,  but  the  tools  of  the 
artisan  were  of  the  poorest  and  rudest  description,  and 
commerce  could  only  be  carried  on,  as  it  were,  by  stealth. 

Is  it  not  clear  that  this  tyranny  and  insecurity  have 
produced  the  want  and  starvation  of  India;  and  not,  as 
according  to  Buckle,  the  pressure  of  population  upon 


Chap.  11.  INFEKENCES   FROM   FACTS.  115 

subsistence  that  has  produced  the  want,  and  the  want  the 
tyranny.*  Says  the  Rev.  William  Tennant,  a  chaplain 
in  the  service  of  the  East  India  Company,  writing  in 
1796,  two  years  before  the  publication  of  the  "Essay  on 
Population:" 

"When  we  reflect  upon  the  great  fertility  of  Hindostan,  it  is 
amazing  to  consider  the  frequency  of  famine.  It  is  evidently  not 
owing  to  any  sterility  of  soil  or  climate;  the  evil  must  be  traced  to 
some  political  cause,  and  it  requires  but  little  penetration  to  discover 
it  in  the  avarice  and  extortion  of  the  various  governments.  The 
great  spur  to  industry,  that  of  security,  is  taken  away.  Hence  no 
man  raises  more  grain  than  is  barely  sufficient  for  himself,  and  the 
first  unfavorable  season  produces  a  famine. 

"  The  Mogul  government  at  no  period  offered  full  security  to  the 
prince,  still  less  to  his  vassals;  and  to  peasants  the  most  scanty  pro- 
tection of  all.  It  was  a  continued  tissue  of  violence  and  insurrection, 
treachery  and  punishment,  under  which  neither  commerce  nor  the 
arts  could  prosper,  nor  agriculture  assume  the  appearance  of  a  sys- 
tem. Its  downfall  gave  rise  to  a  state  still  more  afflictive,  since 
anarchy  is  worse  than  misrule.  The  Mohammedan  government, 
wretched  as  it  was,  the  European  nations  have  not  the  merit  of  over- 
turning. It  fell  beneath  the  weight  of  its  own  corruption,  and  had 
already  been  succeeded  by  the  multifarious  tyranny  of  petty  chiefs, 
whose  right  to  govern  consisted  in  their  treason  to  the  state,  and 
whose  exactions  on  the  peasants  were  as  boundless  as  their  avarice. 
The  rents  to  government  were,  and,  where  natives  rule,  still  are, 
levied  twice  a  year  by  a  merciless  banditti,  under  the  semblance  of 
an  army,  who  wantonly  destroy  or  carry  off  whatever  part  of  the 
produce  may  satisfy  their  caprice  or  satiate  their  avidity,  after  having 
hunted  the  ill-fated  peasants  from  the  villages  to  the  woods.  Any 
attempt  of  the  peasants  to  defend  their  persons  or  property  within 
the  mud  walls  of  their  villages  only  calls  for  the  more  signal  venge- 
ance on  those  useful,  but  ill-fated  mortals.      They  are  then  sur- 

*  History  of  Civilization.  Vol.  I.,  Chap.  2.  In  this  chapter 
Buckle  has  collected  a  great  deal  of  evidence  of  the  oppression  and 
degradation  of  the  people  of  India  from  the  most  remote  times,  a 
condition  which,  blinded  by  the  Malthusian  doctrine,  he  has  accepted 
and  made  the  cornerstone  of  his  theory  of  the  development  of  civili- 
zation, he  attributes  to  the  ease  with  which  food  can  there  be  pro- 
duced. 


116  POPULATIO]!?  AKD   SUBSISTEITCB.  Booh  11. 

rounded  and  attacked  witli  musketry  and  field  pieces  till  resistance 
ceases,  when  the  survivors  are  sold,  and  their  habitations  burned  and 
leveled  with  the  ground.  Hence  you  will  frequently  meet  with  the 
ryots  gathering  up  the  scattered  remnants  of  what  had  yesterday 
been  their  habitation,  if  fear  has  permitted  them  to  return;  but 
oftener  the  ruins  are  seen  smoking,  after  a  second  visitation  of  this 
kind,  without  the  appearance  of  a  human  being  to  interrupt  the 
awful  silence  of  desolation.  This  description  does  not  apply  to  the 
Mohammedan  chieftains  alone;  it  is  equally  applicable  to  the  Rajahs 
in  the  districts  governed  by  Hindoos."  * 

To  this  merciless  rapacity,  which  would  have  produced 
want  and  famine  were  the  population  but  one  to  a 
square  mile  and  the  land  a  Garden  of  Eden,  succeeded, 
in  the  first  era  of  British  rule  in  India,  as  merciless  a 
rapacity,  backed  by  a  far  more  irresistible  power.  Says 
Macaulay,  in  his  essay  on  Lord  Olive: 

"  Enormous  fortunes  were  rapidly  accumulated  at  Calcutta,  while 
millions  of  human  beings  were  reduced  to  the  extremity  of  wretched- 
ness. They  had  been  accustomed  to  live  under  tyranny,  but  never 
under  tyranny  like  this.  They  found  the  little  finger  of  the  Com- 
pany thicker  than  the  loins  of  Surajah  Dowlah.  *  *  *  It  resembled 
the  government  of  evil  genii,  rather  than  the  government  of  human 
tyrants.  Sometimes  they  submitted  in  patient  misery.  Sometimes 
they  fled  from  the  white  man  as  their  fathers  had  been  used  to  fly 
from  the  Maharatta,  and  the  palanquin  of  the  English  traveler  was 
often  carried  through  silent  villages  and  towns  that  the  report  of  his 
approach  had  made  desolate." 

Upon  horrors  that  Macaulay  thus  but  touches,  the 
vivid  eloquence  of  Burke  throws  a  stronger  light — whole 
districts  surrendered  to  the  unrestrained  cupidity  of  the 
worst  of  human  kind,  poverty-stricken  peasants  fiend- 
ishly tortured  to  compel  them  to  give  up  their  little 
hoards,  and  once  populous  tracts  turned  into  deserts. 

But  the  lawless  license  of  early  English  rule  has  been 
long  restrained,,     To  all  that  vast  population  the  strong 

*  Indian  Recreations.  By  Rev.  Wm.  Tennant.  London,  1804. 
Vol.  I.,  Sec.  XXXIX. 


Chap.n.  IISTFEREN'CES  FROM   FACTS.  117 

hand  of  England  has  given  a  more  than  Koman  peace; 
the  just  principles  of  English  law  have  been  extended 
by  an  elaborate  system  of  codes  and  law  officers  designed 
to  secure  to  the  humblest  of  these  abject  peoples  the 
rights  of  Anglo-Saxon  freemen;  the  whole  peninsula  has 
been  intersected  by  railways,  and  great  irrigation  works 
have  been  constructed.  Yet,  with  increasing  frequency, 
famine  has  succeeded  famine,  raging  with  greater 
intensity  over  wider  areas. 

Is  not  this  a  demonstration  of  the  Malthusian  theory? 
Does  it  not  show  that  no  matter  how  much  the  possibili- 
ties of  subsistence  are  increased,  population  still  con- 
tinues to  press  upon  it?  Does  it  not  show,  as  Malthus 
contended,  that,  to  shut  up  the  sluices  by  which  super- 
abundant population  is  carried  off,  is  but  to  compel 
nature  to  open  new  ones,  and  that  unless  the  soiarces  of 
human  increase  are  checked  by  prudential  regulation, 
the  alternative  of  war  is  famine?  This  has  been  the 
orthodox  explanation.  But  the  truth,  as  may  be  seen  in 
the  facts  brought  forth  in  recent  discussions  of  Indian 
affairs  in  the  English  periodicals,  is  that  these  famines, 
which  have  been,  and  are  now,  sweeping  away  their  mil- 
lions, are  no  more  due  to  the  pressure  of  population  upon 
the  natural  limits  of  subsistence  than  was  the  desolation 
of  the  Carnatic  when  Hyder  All's  horsemen  burst  upon  it 
in  a  whirlwind  of  destruction. 

The  millions  of  India  have  bowed  their  necks  beneath 
the  yokes  of  many  conquerors,  but  worst  of  all  is  the 
steady,  grinding  weight  of  English  domination — a  weight 
which  is  literally  crushing  millions  out  of  existence,  and, 
as  shown  by  English  writers,  is  inevitably  tending  to  a 
most  frightful  and  widespread  catastrophe.  Other  con- 
querors have  lived  in  the  land,  and,  though  bad  and 
tyrannous  in  their  rule,  have  understood  and  been  un- 
derstood by  the  people;  but  India  now  is  like  a  great 
estate  owned  by  an  absentee  and  alien  landlord.     A  most 


118  POPULATIOlf  AND   SUBSISTENCE.  Booh  II. 

expensive  military  and  civil  establishment  is  kept  up, 
managed  and  oflBcered  by  Englishmen  who  regard  India 
as  but  a  place  of  temporary  exile;  and  an  enormous  sum, 
estimated  as  at  least  £20,000,000  annually,  raised  from  a 
population  where  laborers  are  in  many  places  glad  in 
good  times  to  work  for  l^d.  to  4d.   a  day,  is  drained 
away  to  England  in  the  shape  of  remittances,  pensions, 
home   charges   of  the  government,  etc. — a  tribute  for 
which  there  is  no  return.     The  immense  sums  lavished 
on  railroads  have,  as  shown  by  the  returns,  been  econom- 
ically unproductive;  the  great  irrigation  works  are  for 
the  most  part  costly  failures.     In  large  parts  of  India 
the  English,  in  their  desire  to  create  a  class  of  landed 
proprietors,  turned  over  the  soil  in  absolute  possession  to 
hereditary  tax-gatherers,  who  rack-rent   the  cultivators 
most  mercilessly.     In  other  parts,  where  the  rent  is  still 
taken  by  the  State  in  the  shape  of  a  land  tax,  assessments 
are  so  high,  and  taxes  are  collected  so  relentlessly,  as  to 
drive  the  ryots,  who  get  but  the  most  scanty  living  in 
good  seasons,  into  the  claws  of  money  lenders,  who  are, 
if  possible,   even  more  rapacious   than   the   zemindars. 
Upon  salt,  an  article  of  prime  necessity  everywhere,  and 
of  especial  necessity  where   food   is  almost   exclusively 
vegetable,  a  tax  of  nearly  twelve  hundred  per  cent,  is 
imposed,  so  that  its  various  industrial  uses  are  prohib- 
ited, and  large  bodies  of  the  people  cannot  get  enough  to 
keep  either  themselves  or  their  cattle  in  health.     Below 
the  English  officials  are  a  horde  of  native  employees  who 
oppress  and  extort.     The  effect  of  English  law,  with  its 
rigid  rules,  and,  to  the  native,  mysterious  proceedings, 
has  been  but  to  put  a  potent  instrument  of  plunder  into 
the  hands  of  the  native  money  lenders,  from  Avhom  the 
peasants  are  compelled  to  borrow  on  the  most  extrava- 
gant terms  to  meet   their  taxes,  and  to  whom  they  are 
easily  induced  to  give  obligations  of  which  they  know 
not  the  meaning.     ''We  do  not  care  for  the  people  of 


Chap.n.  INFERENCES   PROM  FACTS.  119 

India/'  writes  Florence  Nightingale,  with  what  seems 
like  a  sob.  "The  saddest  sight  to  be  seen  in  the  East — < 
nay,  probably  in  the  world — is  the  peasant  of  our  East- 
ern Empire."  And  she  goes  on  to  show  the  causes  of 
the  terrible  famines,  in  taxation  which  takes  from  the 
cultivators  the  very  means  of  cultivation,  and  the  actual 
slavery  to  which  the  ryots  are  reduced  as  "the  conse- 
quences of  our  own  laws;"  producing  in  "the  most  fer- 
tile country  in  the  world,  a  grinding,  chronic  semi-star- 
vation in  many  places  where  what  is  called  famine  does 
not  exist."  *  "The  famines  which  have  been  devastating 
India,"  says  H.  M.  Hyndman,f  "are  in  the  main  finan- 
cial famines.  Men  and  women  cannot  get  food,  because 
they  cannot  save  the  money  to  buy  it.  Yet  we  are 
driven,  so  we  say,  to  tax  these  people  more."  And  he 
shows  how,  even  from  famine  stricken  districts,  food  is 
exported  in  payment  of  taxes,  and  how  the  whole  of 
India  is  subjected  to  a  steady  and  exhausting  drain, 
which,  combined  with  the  enormous  expenses  of  govern- 
ment, is  making  the  population  year  by  year  poorer. 
The  exports  of  India  consist  almost  exclusively  of  agri- 
cultural products.  For  at  least  one-third  of  these,  as 
Mr.  Hyndman   shows,  no  return  whatever  is  received; 

*  Miss  Nightingale  (The  People  of  India,  in  "  Nineteenth  Century" 
for  August,  1878)  gives  instances,  which  she  says  represent  millions 
of  cases,  of  the  state  of  peonage  to  which  the  cultivators  of  Southern 
India  have  been  reduced  through  the  facilities  afforded  by  the  Civil 
Courts  to  the  frauds  and  oppressions  of  money  lenders  and  minor 
native  officials.  "Our  Civil  Courts  are  regarded  as  institutions  for 
enabling  the  rich  to  grind  the  faces  of  the  poor,  and  many  are  fain 
to  seek  a  refuge  from  their  jurisdiction  within  native  territory,"  says 
Sir  David  Wedderburn,  in  an  article  on  Protected  Princes  in  India, 
in  a  previous  (July)  number  of  the  same  magazine,  in  which  he  also 
gives  a  native  State,  where  taxation  is  comparatively  light,  as  an 
instance  of  the  most  prosperous  population  of  India. 

fSee  articles  in  "Nineteenth  Century  "for  October,  1878,  and 
March,  1879. 


120  POPULATIOIT   AND   SUBSISTENCE.  Book  It 

they  represent  tribute — remittances  made  by  English- 
men in  India,  or  expenses  of  the  English  branch  of  the 
Indian  government.*    And  for  the  rest,  the  return  is  for 
the  most  part  government  stores,  or  articles  of  comfort 
and  luxury  used  by  the  English  masters  of  India.     He 
shows  that  the  expenses  of  government  have  been  enor- 
mously increased  under  Imperial  rule;  that  the  relentless 
taxation  of  a  population  so   miserably   poor  that  the 
masses  are  not  more  than  half  fed,  is  robbing  them  of 
their  scanty   means  for   cultivating   the  soil;  that  the 
number  of  bullocks  (the  Indian  draft  animal)  is  decreas- 
ing, and  the  scanty  implements  of  culture  being  given  up 
to  money  lenders,  from  whom  "we,  a  business  people,  are 
forcing  the  cultivators  to  borrow  at  12,24,  60  per  cent,  f 
to  build  and  pay  the  interest  on  the  cost  of  vast  public 
works,  which  have  never  paid   nearly  five  per  cent." 
Says  Mr.  Hyndman:  "The  truth  is  that  Indian  society 
as  a  whole  has  been  frightfully  impoverished  under  our 
rule,  and  that  the  process  is  now  going  on  at  an  exceed- 
ingly rapid  rate" — a  statement  which  cannot  be  doubted, 
in  view  of  the  facts  presented  not  only  by  such  writers 
as  I  have  referred  to,  but  by  Indian  officials  themselves. 
The  very  efforts  made  by   the   government  to  alleviate 
famines  do,  by  the  increased  taxation  imposed,  but  in- 
tensify and  extend  their  real  cause.     Although  in  the 
recent  famine  in  Southern  India  six  millions  of  people, 
it  is  estimated,    perished  of  actual  starvation,  and  the 
great  mass  of  those  who  survived  were  actually  stripped, 

*  Prof.  Fawcett,  in  a  recent  article  on  the  Proposed  Loans  to  India, 
calls  attentions  to  such  items  as  £1,200  for  outfit  and  passage  of  a 
member  of  the  Governor  General's  Council;  £3,450  for  outfit  and 
passage  of  Bishops  of  Calcutta  and  Bombay. 

f  Florence  Nightingale  says  100  per  cent,  is  common,  and  even 
then  the  cultivator  is  robbed  in  ways  which  she  illustrates.  It  is 
hardly  necessary  to  say  that  these  rates,  like  those  of  the  pawnbroker, 
are  not  interest  in  the  economic  sense  of  the  term. 


Chap.  II.  INFERENCES   FROM   FACTS.  121 

yet  the  taxes  were  not  remitted  and  the  salt  tax,  already 
prohibitory  to  the  great  bulk  of  these  poverty  stricken 
people,  was  increased  forty  percent.,  just  as  after  the  ter- 
rible Bengal  famine  in  1770  the  revenue  was  actually 
driven  up,  by  raising  assessments  upon  the  survivors  and 
rigorously  enforcing  collection. 

In  India  now,  as  in  India  in  past  times,  it  is  only  the 
most  superficial  view  that  can  attribute  want  and  starva- 
tion to  pressure  of  population  upon  the  ability  of  the 
land  to  produce  subsistence.  Could  the  cultivators 
retain  their  little  capital — could  they  be  released  from 
the  drain  which,  even  in  non-famine  years,  reduces  great 
masses  of  them  to  a  scale  of  living  not  merely  below 
what  is  deemed  necessary  for  the  sepoys,  but  what  Eng- 
lish humanity  gives  to  the  prisoners  in  the  jails — reviv- 
ing industry,  assuming  more  productive  forms,  would 
undoubtedly  suffice  to  keep  a  much  greater  population. 
There  are  still  in  India  great  areas  uncultivated,  vast 
mineral  resources  untouched,  and  it  is  certain  that  the 
population  of  India  does  not  reach,  as  within  historical 
times  it  never  has  reached,  the  real  limit  of  the  soil  to 
furnish  subsistence,  or  even  the  point  where  this  power 
begins  to  decline  with  the  increasing  drafts  made  upon 
it.  The  real  cause  of  want  in  India  has  been,  and  yet  is, 
the  rapacity  of  man,  not  the  niggardliness  of  nature. 

What  is  true  of  India  is  true  of  China.  Densely  popu- 
lated as  China  is  in  many  parts,  that  the  extreme  poverty 
of  the  lower  classes  is  to  be  attributed  to  causes  similar 
to  those  which  have  operated  in  India,  and  not  to  too 
great  population,  is  shown  by  many  facts.  Insecurity 
prevails,  production  goes  on  under  the  greatest  disad- 
vantages, and  exchange  is  closely  fettered.  Where  the 
government  is  a  succession  of  squeezings,  and  security 
for  capital  of  any  sort  must  be  purchased  of  a  mandarin; 
where  men's  shoulders  are  the  great  reliance  for  inland 
transportation;    where  the  junk  is  obliged  to  be   con- 


122  POPULATION"  AISTD   SUBSISTENCE.  Book  11. 

structed  so  as  to  unfit  it  for  a  sea-boat;  where  piracy  is  a 
regular  trade,  and  robbers  often  march  in  regiments, 
poverty  would  prevail  and  the  failure  of  a  crop  result  in 
famine,  no  matter  how  sparse  the  population.*  That 
China  is  capable  of  supporting  a  much  greater  population 
is  shown  not  only  by  the  great  extent  of  uncultivated  land 
to  which  all  travelers  testify,  but  by  the  immense  un- 
worked  mineral  deposits  which  are  there  known  to  exist. 
China,  for  instance,  is  said  to  contain  the  largest  and 
finest  deposit  of  coal  yet  anywhere  discovered.  How 
much  the  working  of  these  coal  beds  would  add  to  the 
ability  to  support  a  greater  population,  may  readily  be 
imagined.  Coal  is  not  food,  it  is  true;  but  its  production 
is  equivalent  to  the  production  of  food.  For,  not  only 
may  coal  be  exchanged  for  food,  as  is  done  in  all  mining 
districts,  but  the  force  evolved  by  its  consumption  may 
be  used  in  the  production  of  food,  or  may  set  labor  free 
for  the  production  of  food. 

Neither  in  India  nor  China,  therefore,  can  poverty  and 
starvation  be  charged  to  the  pressure  of  population 
against  subsistence.  It  is  not  dense  population,  but  the 
causes  which  prevent  social  organization  from  taking  its 
natural  development  and  labor  from  securing  its  full 
return,  that  keep  millions  just  on  the  verge  of  starva- 
tion, and  every  now  and  again  force  millions  beyond  it. 
That  the  Hindoo  laborer  thinks  himself  fortunate  to  get 
a  handful  of  rice,  that  the  Chinese  eat  rats  and  puppies, 
is  no  more  due  to  the  pressure  of  population  than  it  is 
due  to  the  pressure  of  population  that  the  Digger  Indians 
live  on  grasshoppers,  or  the  aboriginal  inhabitants  of 
Australia  eat  the  worms  found  in  rotten  wood. 

Let  me  be  understood.  I  do  not  mean  merely  to  say 
that  India  or  China  could,  with  a  more  highly  developed 

*  The  seat  of  recent  famine  in   China  was  not  the  most   thickly 
settled  districts. 


Chap.n.  IKFERENCES  FROM  FACTS.  123 

civilization,  maintain  a  greater  population,  for  to  this 
any  Maltliusian  would  agree.  The  Malthusian  doctrine 
does  not  deny  that  an  advance  in  the  productive  arts 
would  permit  a  greater  population  to  find  subsistence. 
But  the  Malthusian  theory  affirms — and  this  is  its  essence 
— that,  whatever  be  the  capacity  for  production,  the 
natural  tendency  of  population  is  to  come  up  with  it, 
and,  in  the  endeavor  to  press  beyond  it,  to  produce,  to 
use  the  phrase  of  Malthus,  that  degree  of  vice  and  misery 
which  is  necessary  to  prevent  further  increase;  so  that  as 
productive  power  is  increased,  population  will  corre- 
spondingly increase,  and  in  a  little  time  produce  the 
same  results  as  before.  What  I  say  is  this:  that  nowhere 
is  there  any  instance  which  will  support  this  theory; 
that  nowhere  can  want  be  properly  attributed  to  the 
pressure  of  population  against  the  power  to  procure  sub- 
sistence in  the  then  existing  degree  of  human  knowledge; 
that  everywhere  the  vice  and  misery  attributed  to  over- 
population can  be  traced  to  the  warfare,  tyranny,  and 
oppression  which  prevent  knowledge  from  being  utilized 
and  deny  the  security  essential  to  production.  The  rea- 
son why  the  natural  increase  of  population  does  not  pro- 
duce want,  we  shall  come  to  hereafter.  The  fact  that  it 
has  not  yet  anywhere  done  so,  is  what  we  are  now  con- 
cerned with.  This  fact  is  obvious  with  regard  to  India 
and  China.  It  will  be  obvious,  too,  wherever  we  trace 
to  their  causes  the  results  which  on  superficial  view  are 
often  taken  to  proceed  from  over-population. 

Ireland,  of  all  European  countries,  furnishes  the  great 
stock  example  of  over-population.  The  extreme  poverty 
of  the  peasantry  and  the  low  rate  of  wages  there  prevail- 
ing, the  Irish  famine,  and  Irish  emigration,  are  con- 
stantly referred  to  as  a  demonstration  of  the  Malthusian 
theory  worked  out  under  the  eyes  of  the  civilized  world. 
I  doubt  if  a  more  striking  instance  can  be  cited  of  the 
power  of  a  preaccepted  theory  to  blind  men  as  to  the 


124  POPULATION   AND    SUBSISTENCE.  Book  II. 

true  relations  of  facts.  The  truth  is,  and  it  lies  on  the 
surface,  that  Ireland  has  never  yet  had  a  population 
which  the  natural  powers  of  the  country,  in  the  existing 
state  of  the  productive  arts,  could  not  have  maintained 
in  ample  comfort.  At  the  period  of  her  greatest  popu- 
lation (1840-45)  Ireland  contained  something  over  eight 
millions  of  people.  But  a  very  large  proportion  of  them 
managed  merely  to  exist — lodging  in  miserable  cabins, 
clothed  with  miserable  rags,  and  with  but  potatoes  for 
their  staple  food.  When  the  potato  blight  came,  they 
died  by  thousands.  But  was  it  the  inability  of  the  soil 
to  support  so  large  a  population  that  compelled  so  many 
to  live  in  this  miserable  way,  and  exposed  them  to  starva- 
tion on  the  failure  of  a  single  root  crop?  On  the  con- 
trary, it  was  the  same  remorseless  rapacity  that  robbed 
the  Indian  ryot  of  the  fruits  of  his  toil  and  left  him  to 
starve  where  nature  offered  plenty.  A  merciless  banditti 
of  tax-gatherers  did  not  march  through  the  land  plunder- 
ing and  torturing,  but  the  laborer  was  just  as  effectually 
stripped  by  as  merciless  a  horde  of  landlords,  among 
whom  the  soil  had  been  divided  as  their  absolute  posses- 
sion, regardless  of  any  rights  of  those  who  lived  upon  it. 
Consider  the  conditions  of  production  under  which 
this  eight  millions  managed  to  live  until  the  potato 
blight  came.  It  was  a  condition  to  which  the  words 
used  by  Mr.  Tennant  in  reference  to  India  may  as  appro- 
priately be  applied — "the  great  spur  to  industry,  that  of 
security,  was  taken  away."  Cultivation  was  for  the 
most  part  carried  on  by  tenants  at  will,  who,  even  if  the 
rack-rents  which  they  were  forced  to  pay  had  permitted 
them,  did  not  dare  to  make  improvements  which  would 
have  been  but  the  signal  for  an  increase  of  rent.  Labor 
was  thus  applied  in  the  most  inefficient  and  wasteful 
manner,  and  labor  was  dissipated  in  aimless  idleness 
that,  with  any  security  for  its  fruits,  would  have  been 
applied   unremittingly.     But  even   under  these  condi- 


Chap.n.  INFEREIiCES   FROM   FACTS.  125 

tions,  it  is  a  matter  of  fact  that  Ireland  did  more  than 
support  eight  millions.  For  when  her  population  was  at 
its  highest,  Ireland  was  a  food-exporting  country.  Even 
during  the  famine,  grain  and  meat  and  butter  and  cheese 
were  carted  for  exportation  along  roads  lined  with  the 
starving  and  past  trenches  into  which  the  dead  were 
piled.  For  these  exports  of  food,  or  at  least  for  a  great 
part  of  them,  there  was  no  return.  So  far  as  the  people 
of  Ireland  were  concerned,  the  food  thus  exported  might 
as  well  have  been  burned  up  or  thrown  into  the  sea,  or 
never  produced.  It  went  not  as  an  exchange,  but  as  a 
tribute — to  pay  the  rent  of  absentee  landlords;  a  levy 
wrung  from  producers  by  those  who  in  no  wise  con- 
tributed to  production. 

Had  this  food  been  left  to  those  who  raised  it;  had  the 
cultivators  of  the  soil  been  permitted  to  retain  and  use 
the  capital  their  labor  produced;  had  security  stimulated 
industry  and  permitted  the  adoption  of  economical 
methods,  there  would  have  been  enough  to  support  in 
bounteous  comfort  the  largest  population  Ireland  ever 
had,  and  the  potato  blight  might  have  come  and  gone 
without  stinting  a  single  human  being  of  a  full  meal. 
For  it  was  not  the  imprudence  "of  Irish  peasants,"  as 
English  economists  coldly  say,  which  induced  them  to 
make  the  potato  the  staple  of  their  food.  Irish  emi- 
grants, when  they  can  get  other  things,  do  not  live  upon 
the  potato,  and  certainly  in  the  United  States  the  pru- 
dence of  the  Irish  character,  in  endeavoring  to  lay  by 
something  for  a  rainy  day,  is  remarkable.  They  lived  on 
the  potato,  because  rack-rents  stripped  everything  else 
from  them.  The  truth  is,  that  the  poverty  and  misery 
of  Ireland  have  never  been  fairly  attributable  to  over- 
population. 

McCulloch,  writing  in  1838,  says,  in  Note  IV  to 
"Wealth  of  Nations:" 


136  POPULATION  AND  SUBSISTENCE.  Boolt  II. 

"  The  wonderful  density  of  population  in  Ireland  is  the  immediate 
cause  of  the  abject  poverty  and  depressed  condition  of  the  great 
bulk  of  the  people.  It  is  not  too  much  to  say  that  there  are  at 
present  more  than  double  the  persons  in  Ireland  it  is,  with  its  exist- 
ing means  of  production,  able  either  fully  to  employ  or  to  maintain 
in  a  moderate  state  of  comfort." 

As  in  1841   the  population  of  Ireland  was  given   as 
8,175,124,  we  may  set  it  down  in  1838  as  about  eight 
millions.     Thus,  to  change  McCulloch's  negative  into  an 
affirmative,  Ireland   would,  according  to  the  over-popu- 
lation theory,  have  been  able  to  employ  fully  and  main- 
tain in  a  moderate  state  of  comfort  something  less  than 
four  million  persons.     Now,  in  the  early  part  of  the  pre- 
ceding century,  when  Dean   Swift   wrote  his  "Modest 
Proposal,"  the  population  of  Ireland  was  about  two  mil- 
lions.    As  neither  the  means  nor  the  arts  of  production 
had  perceptibly  advanced  in  Ireland  during  the  interval, 
then — if  the  abject  poverty  and  depressed  condition  of 
the  Irish  people  in  1838  were  attributable  to  over-popula- 
tion— there  should,   upon  McCulloch's  own   admission, 
have  been  in  Ireland  in  1727  more  than  full  employment, 
and  much  more  than  a  moderate  state  of  comfort,  for 
the  whole  two  millions.     Yet,  instead  of  this  being  the 
case,  the  abject  poverty  and  depressed  condition  of  the 
Irish  people  in  1727  were  such,  that,  with  burning,  blis- 
tering irony.  Dean   Swift  proposed   to   relieve   surplus 
population  by  cultivating  a  taste  for  roasted  babies,  and 
bringing  yearly  to  the  shambles,  as  dainty  food  for  the 
rich,  100,000  Irish  infants! 

It  is  difficult  for  one  who  has  been  looking  over  the 
literature  of  Irish  misery,  as  while  writing  this  chapter  I 
have  been  doing,  to  speak  in  decorous  terms  of  the  com- 
placent attribution  of  Irish  want  and  suffering  to  over- 
population which  are  to  be  found  even  in  the  works  of 
such  high-minded  men  as  Mill  and  Buckle.  I  know  of 
nothing  better  calculated  to  make  the  blood  boll  than 


Chap.  II.  INFERENCES    FROM   FACTS.  127 

the  cold  accounts  of  the  grasping,  grinding  tyranny  to 
which  the  Irish  people  have  been  subjected,  and  to 
which,  and  not  to  any  inability  of  the  land  to  support  its 
population,  Irish  pauperism  and  Irish  famine  are  to  be 
attributed;  and  were  it  not  for  the  enervating  effect 
which  the  history  of  the  world  proves  to  be  everywhere 
the  result  of  abject  poverty,  it  would  be  difficult  to  resist 
something  like  a  feeling  of  contempt  for  a  race  who, 
stung  by  such  wrongs,  have  only  occasionally  murdered 
a  landlord! 

Whether  over-population  ever  did  cause  pauperism  and 
starvation,  may  be  an  open  question;  but  the  pauperism 
and  starvation  of  Ireland  can  no  more  be  attributed  to 
this  cause  than  can  the  slave  trade  be  attributed  to  the 
over-population  of  Africa,  or  the  destruction  of  Jerusa- 
lem to  the  inability  of  subsistence  to  keep  pace  with 
reproduction.  Had  Ireland  been  by  nature  a  grove  of 
bananas  and  bread-fruit,  had  her  coasts  been  lined  by  the 
guano-deposits  of  the  Chinchas,  and  the  sun  of  lower 
latitudes  warmed  into  more  abundant  life  her  moist  soil, 
the  social  conditions  that  have  prevailed  there  would 
still  have  brought  forth  poverty  and  starvation.  How 
could  there  fail  to  be  pauperism  and  famine  in  a  country 
where  rack-rents  wrested  from  the  cultivator  of  the  soil 
all  the  produce  of  his  labor  except  just  enough  to  main- 
tain life  in  good  seasons;  where  tenure  at  will  forbade 
improvements  and  removed  incentive  to  any  but  the  most 
wasteful  and  poverty-stricken  culture;  where  the  tenant 
dared  not  accumulate  capital,  even  if  he  could  get  it,  for 
fear  the  landlord  would  demand  it  in  the  rent;  where  in 
fact  he  was  an  abject  slave,  who,  at  the  nod  of  a  human 
being  like  himself,  might  at  any  time  be  driven  from  his 
miserable  mud  cabin,  a  houseless,  homeless,  starving 
wanderer,  forbidden  even  to  pluck  the  spontaneous  fruits 
of  the  earth,  or  to  trap  a  wild  hare  to  satisfy  his  hunger? 
No  matter  how  sparse  the  population,  no  matter  what 


128  POPULATION  AND   SUBSISTENCE.  Book  II. 

the  natural  resources,  are  not  pauperism  and  starvation 
necessary  consequences  in  a  land  where  the  producers  of 
wealth  are  compelled  to  work  under  conditions  which 
deprive  them  of  hope,  of  self-respect,  of  energy,  of  thrift; 
where  absentee  landlords  drain  away  without  return  at 
least  a  fourth  of  the  net  produce  of  the  soil,  and  when, 
besides  them,  a  starving  industry  must  support  resident 
landlords,  with  their  horses  and  hounds,  agents,  jobbers, 
middlemen  and  bailiffs,  an  alien  state  church  to  insult 
religious  prejudices,  and  an  army  of  policemen  and  sol- 
diers to  overawe  and  hunt  down  any  opposition  to  the 
iniquitous  system?  Is  it  not  impiety  far  worse  than 
atheism  to  charge  upon  natural  laws  misery  so  caused  ? 

What  is  true  in  these  three  cases  will  be  found  upon 
examination  true  of  all  cases.  So  far  as  our  knowl- 
edge of  facts  goes,  we  may  safely  deny  that  the  in- 
crease of  population  has  ever  yet  pressed  upon  subsist- 
ence in  such  a  way  as  to  produce  vice  and  misery;  that 
increase  of  numbers  has  ever  yet  decreased  the  relative 
production  of  food.  The  famines  of  India,  China,  and 
Ireland  can  no  more  be  credited  to  over-population  than 
the  famines  of  sparsely  populated  Brazil.  The  vice  and 
misery  that  come  of  want  can  no  more  be  attributed 
to  the  niggardliness  of  Nature  than  can  the  six  mil- 
lions slain  by  the  sword  of  Genghis  Khan,  Tamerlane's 
pyramid  of  skulls,  or  the  extermination  of  the  ancient 
Britons  or  of  the  aboriginal  inhabitants  of  the  West 
Indies. 


CHAPTER  III. 

INFERENCES   FROM   ANALOGY. 

If  we  turn  from  an  examination  of  the  facts  brought 
forward  in  illustration  of  the  Malthusian  theory  to  con- 
sider the  analogies  by  which  it  is  supported,  we  shall  find 
the  same  inconclusiveness. 

The  strength  of  the  reproductive  force  in  the  animal 
and  vegetable  kingdoms — such  facts  as  that  a  single  pair 
of  salmon  might,  if  preserved  from  their  natural  enemies 
for  a  few  years,  fill  the  ocean;  that  a  pair  of  rabbits 
would,  under  the  same  circumstances,  soon  overrun  a 
continent;  that  many  plants  scatter  their  seeds  by  the 
hundred  fold,  and  some  insects  deposit  thousands  of 
eggs;  and  that  everywhere  through  these  kingdoms  each 
species  constantly  tends  to  press,  and  when  not  limited 
by  the  number  of  its  enemies,  evidently  does  press, 
against  the  limits  of  subsistence — is  constantly  cited, 
from  Malthus  down  to  the  text-books  of  the  present  day, 
as  showing  that  population  likewise  tends  to  press  against 
subsistence,  and,  when  unrestrained  by  other  means,  its 
natural  increase  must  necessarily  result  in  such  low 
wages  and  want,  or,  if  that  will  not  suffice,  and  the  in- 
crease still  goes  on,  in  such  actual  starvation,  as  will 
keep  it  within  the  limits  of  subsistence. 

But  is  this  analogy  valid?  It  is  from  the  vegetable 
and  animal  kingdoms  that  man's  food  is  drawn,  and 
hence  the  greater  strength  of  the  reproductive  force  in 
the  vegetable  and  animal  kingdoms  than  in  man  simply 
proves  the  power  of  subsistence  to  increase  faster  than 


130  POPULATION    AND    SUBSISTENCE.  Book  II. 

population.  Does  not  the  fact  that  all  of  the  things 
which  furnish  man's  subsistence  have  the  power  to  multi- 
ply many  fold — some  of  them  many  thousand  fold,  and 
some  of  them  many  million  or  even  billion  fold — while 
he  is  only  doubling  his  numbers,  show  that,  let  human 
beings  increase  to  the  full  extent  of  their  reproductive 
power,  the  increase  of  population  can  never  exceed  sub- 
sistence? This  is  clear  when  it  is  remembered  that 
though  in  the  vegetable  and  animal  kingdoms  each 
species,  by  virtue  of  its  reproductive  power,  naturally 
and  necessarily  presses  against  the  conditions  which  limit 
its  further  increase,  yet  these  conditions  are  nowhere 
fixed  and  final.  No  species  reaches  the  ultimate  limit  of 
soil,  water,  air,  and  sunshine;  but  the  actual  limit  of 
each  is  in  the  existence  of  other  species,  its  rivals,  its 
enemies,  or  its  food.  Thus  the  conditions  which  limit 
the  existence  of  such  of  these  species  as  afford  him  sub- 
sistence man  can  extend  (in  some  cases  his  mere  appear- 
ance will  extend  them),  and  thus  the  reproductive  forces 
of  the  species  which  supply  his  wants,  instead  of  wasting 
themselves  against  their  former  limit,  start  forward  in 
his  service  at  a  pace  which  his  powers  of  increase  can- 
not rival.  If  he  but  shoot  hawks,  food-birds  will  in- 
crease, if  he  but  trap  foxes  the  wild  rabbits  will  multiply; 
the  honey  bee  moves  with  the  pioneer,  and  on  the  or- 
ganic matter  with  which  man's  presence  fills  the  rivers, 
fishes  feed. 

Even  if  any  consideration  of  final  causes  be  excluded; 
even  if  it  be  not  permitted  to  suggest  that  the  high  and 
constant  reproductive  force  in  vegetables  and  animals 
has  been  ordered  to  enable  them  to  subserve  the  uses  of 
man,  and  that  therefore  the  pressure  of  the  lower  forms 
of  life  against  subsistence  does  not  tend  to  show  that  it 
must  likewise  be  so  with  man,  "the  roof  and  crown  of 
things;"  yet  there  still  remains  a  distinction  between 
man  and  all  other  forms  of  life  that  destroys  the  analogy. 


Chap.m.  INTEREIiCES   FKOM   AISTALOGY.  131 

Of  all  living  things,  man  is  the  only  one  who  can  give 
play  to  the  reproductive  forces,  more  powerful  than  his 
own,  which  supply  him  with  food.  Beast,  insect,  bird, 
and  fish  take  only  what  they  find.  Their  increase  is  at 
the  expense  of  their  food,  and  when  they  have  reached 
the  existing  limits  of  food,  their  food  must  increase  be- 
fore they  can  increase.  But  unlike  that  of  any  other 
living  thing,  the  increase  of  man  involves  the  increase  of 
his  food.  If  bears  instead  of  men  had  been  shipped 
from  Europe  to  the  North  American  continent,  there 
would  now  be  no  more  bears  than  in  the  time  of  Colum- 
bus, and  possibly  fewer,  for  bear  food  would  not  have 
been  increased  nor  the  conditions  of  bear  life  extended, 
by  the  bear  immigration,  but  probably  the  reverse.  But 
within  the  limits  of  the  United  States  alone,  there  are 
now  forty-five  millions  of  men  where  then  there  were 
only  a  few  hundred  thousand,  and  yet  there  is  now  within 
that  territory  much  more  food  per  capita  for  the  forty- 
five  millions  than  there  was  then  for  the  few  hundred 
thousand.  It  is  not  the  increase  of  food  that  has  caused 
this  increase  of  men;  but  the  increase  of  men  that  has 
brought  about  the  increase  of  food.  There  is  more  food, 
simply  because  there  are  more  men. 

Here  is  a  difference  between  the  animal  and  the  man. 
Both  the  jay-hawk  and  the  man  eat  chickens,  but  the 
more  jay-hawks  the  fewer  chickens,  while  the  more  men 
the  more  chickens.  Both  the  seal  and  the  man  eat 
salmon,  but  when  a  seal  takes  a  salmon  there  is  a  salmon 
the  less,  and  were  seals  to  increase  past  a  certain  point 
salmon  must  diminish;  while  by  placing  the  spawn  of  the 
salmon  under  favorable  conditions  man  can  so  increase 
the  number  of  salmon  as  more  than  to  make  up  for  all  he 
may  take,  and  thus,  no  matter  how  much  men  may  in- 
crease, their  increase  need  never  outrun  the  supply  of 
salmon. 

In  short,  while  all  through  the  vegetable  and  animal 


132  POPULATION"   AND   SUBSISTENCE.  Book  II. 

kingdoms  the  limit  of  subsistence  is  independent  of  the 
thing  subsisted,  with  man  the  limit  of  subsistence  is, 
within  the  final  limits  of  earth,  air,  water,  and  sunshine, 
dependent  upon  man  himself.  And  this  being  the  case, 
the  analogy  which  it  is  sought  to  draw  between  the  lower 
forms  of  life  and  man  manifestly  fails.  While  vegetables 
and  animals  do  press  against  the  limits  of  subsistence, 
man  cannot  press  against  the  limits  of  his  subsistence 
until  the  limits  of  the  globe  are  reached.  Observe,  this 
is  not  merely  true  of  the  whole,  but  of  all  the  parts.  As 
we  cannot  reduce  the  level  of  the  smallest  bay  or  harbor 
without  reducing  the  level  not  merely  of  the  ocean  with 
which  it  communicates,  but  of  all  the  seas  and  oceans  of 
the  world,  so  the  limit  of  subsistence  in  any  particular 
place  is  not  the  physical  limit  of  that  place,  but  the 
physical  limit  of  the  globe.  Fifty  square  miles  of  soil 
will  in  the  present  state  of  the  productive  arts  yield  sub- 
sistence for  only  some  thousands  of  people,  but  on  the 
fifty  square  miles  which  comprise  the  city  of  London 
some  three  and  a  half  millions  of  people  are  maintained, 
and  subsistence  increases  as  population  increases.  So  far 
as  the  limit  of  subsistence  is  concerned,  London  may  grow 
to  a  population  of  a  hundred  millions,  or  five  hundred 
millions,  or  a  thousand  millions,  for  she  draws  for  sub- 
sistence upon  the  whole  globe,  and  the  limit  which  sub- 
sistence sets  to  her  growth  in  population  is  the  limit  of 
the  globe  to  furnish  food  for  its  inhabitants. 

But  here  will  arise  another  idea  from  which  the  Mal- 
thusian  theory  derives  great  support — that  of  the  dimin- 
ishing productiveness  of  land.  As  conclusively  proving 
the  law  of  diminishing  productiveness  it  is  said  in  the 
current  treatises  that  were  it  not  true  that  beyond  a  cer- 
tain point  land  yields  less  and  less  to  additional  applica- 
tions of  labor  and  capital,  increasing  population  would 
not  cause  any  extension  of  cultivation,  but  that  all  the 
increased  supplies  needed   could   and  would   be  raised 


Chap.m.  INFERENCES   FROM   ANALOGY.  133 

without  taking  into  cultivation  any  fresh  ground.  As- 
sent to  this  seems  to  involve  assent  to  the  doctrine  that 
the  difficulty  of  obtaining  subsistence  must  increase  with 
increasing  population. 

But  I  think  the  necessity  is  only  in  seeming.  If  the 
proposition  be  analyzed  it  will  be  seen  to  belong  to  a 
class  that  depend  for  validity  upon  an  implied  or  sug- 
gested qualification — a  truth  relatively,  which  taken  ab- 
solutely becomes  a  non-truth.  For  that  man  cannot 
exhaust  or  lessen  the  powers  of  nature  follows  from  the 
indestructibility  of  matter  and  the  persistence  of  force. 
Production  and  consumption  are  only  relative  terms. 
Speaking  absolutely,  man  neither  produces  nor  con- 
sumes. The  whole  human  race,  were  they  to  labor  to 
infinity,  could  not  make  this  rolling  sphere  one  atom 
heavier  or  one  atom  lighter,  could  not  add  to  or  diminish 
by  one  iota  the  sum  of  the  forces  whose  everlasting  cir- 
cling produces  all  motion  and  sustains  all  life.  As  the 
water  that  we  take  from  the  ocean  must  again  return  to 
the  ocean,  so  the  food  we  take  from  the  reservoirs  of 
nature  is,  from  the  moment  we  take  it,  on  its  way  back 
to  those  reservoirs.  What  we  draw  from  a  limited  ex- 
tent of  land  may  temporarily  reduce  the  productiveness 
of  that  land,  because  the  return  may  be  to  other  land,  or 
may  be  divided  between  that  land  and  other  land,  or, 
perhaps,  all  land;  but  this  possibility  lessens  with  in- 
creasing area,  and  ceases  when  the  whole  globe  is  con- 
sidered. That  the  earth  could  maintain  a  thousand  bil- 
lions of  people  as  easily  as  a  thousand  millions  is  a  neces- 
sary deduction  from  the  manifest  truths  that,  at  least  so 
far  as  our  agency  is  concerned,  matter  is  eternal  and 
force  must  forever  continue  to  act.  Life  does  not  use 
up  the  forces  that  maintain  life.  We  come  into  the 
material  universe  bringing  nothing;  we  take  nothing 
away  when  we  depart.  The  human  being,  physically 
considered,  is  but  a  transient  form  of  matter,  a  changing 


134  POPULATION   AND  SUBSISTENCE.  Book  II. 

mode  of  motion.  The  matter  remains  and  the  force 
persists.  Nothing  is  lessened,  nothing  is  weakened. 
And  from  this  it  follows  that  the  limit  to  the  population 
of  the  globe  can  be  only  the  limit  of  space. 

Now  this  limitation  of  space — this  danger  that  the 
human  race  may  increase  beyond  the  possibility  of  finding 
elbow  room — ^is  so  far  off  as  to  have  for  us  no  more  prac- 
tical interest  than  the  recurrence  of  the  glacial  period  or 
the  final  extinguishment  of  the  sun.  Yet  remote  and 
shadowy  as  it  is,  it  is  this  possibility  which  gives  to  the 
Malthusian  theory  its  apparently  self-evident  character. 
But  if  we  follow  it,  even  this  shadow  will  disappear. 
It,  also,  springs  from  a  false  analogy.  That  vegetable 
and  animal  life  tend  to  press  against  the  limits  of  space 
does  not  prove  the  same  tendency  in  human  life. 

Granted  that  man  is  only  a  more  highly  developed 
animal;  that  the  ring-tailed  monkey  is  a  distant  relative 
who  has  gradually  developed  acrobatic  tendencies,  and 
the  hump-backed  whale  a  far-off  connection  who  in  early 
life  took  to  the  sea — granted  that  back  of  these  he  is  kin 
to  the  vegetable,  and  is  still  subject  to  the  same  laws  as 
plants,  fishes,  birds,  and  beasts.  Yet  there  is  still  this 
difference  between  man  and  all  other  animals — he  is  the 
only  animal  whose  desires  increase  as  they  are  fed;  the 
only  animal  that  is  never  satisfied.  The  wants  of  every 
other  living  thing  are  uniform  and  fixed.  The  ox  of  to- 
day aspires  to  no  more  than  did  the  ox  when  man  first 
yoked  him.  The  sea  gull  of  the  English  Channel,  who 
poises  himself  above  the  swift  steamer,  wants  no  better 
food  or  lodging  than  the  gulls  who  circled  round  as  the 
keels  of  Caesar's  galleys  first  grated  on  a  British  beach. 
Of  all  that  nature  offers  them,  be  it  ever  so  abundant,  all 
living  things  save  man  can  take,  and  care  for,  only 
enough  to  supply  wants  which  are  definite  and  fixed. 
The  only  use  they  can  make  of  additional  suj)plies  or 
additional  opportunities  is  to  multiply. 


Chap.ni.  INFEEENCES   FROM  ANALOGY.  135 

But  not  so  with  man.  No  sooner  are  his  animal  wants 
satisfied  than  new  wants  arise.  Food  he  wants  first,  as 
does  the  beast;  shelter  next,  as  does  the  beast;  and  these 
given,  his  reproductive  instincts  assert  their  sway,  as  do 
those  of  the  beast.  But  here  man  and  beast  part  com- 
pany. The  beast  never  goes  further;  the  man  has  but 
set  his  feet  on  the  first  step  of  an  infinite  progression — a 
progression  upon  which  the  beast  never  enters;  a  pro- 
gression away  from  and  above  the  beast. 

The  demand  for  quantity  once  satisfied,  he  seeks 
quality.  The  very  desires  that  he  has  in  common  with 
the  beast  become  extended,  refined,  exalted.  It  is  not 
merely  hunger,  but  taste,  that  seeks  gratification  in  food; 
in  clothes,  he  seeks  not  merely  comfort,  but  adornment; 
the  rude  shelter  becomes  a  house;  the  undiscriminating 
sexual  attraction  begins  to  transmute  itself  into  subtile  in- 
fluences, and  the  hard  and  common  stock  of  animal  life 
to  blossom  and  to  bloom  into  shapes  of  delicate  beauty. 
As  power  to  gratify  his  wants  increases,  so  does  aspira- 
tion grow.  Held  down  to  lower  levels  of  desire,  Lucullus 
will  sup  with  Lucullus;  twelve  boars  turn  on  spits  that 
Antony's  mouthful  of  meat  maybe  done  to  a  turn;  every 
kingdom  of  Nature  be  ransacked  to  add  to  Cleopatra's 
charms,  and  marble  colonnades  and  hanging  gardens  and 
pyramids  that  rival  the  hills  arise.  Passing  into  higher 
forms  of  desire,  that  which  slumbered  in  the  plant  and  fit- 
fully stirred  in  the  beast,  awakes  in  the  man.  The  eyes 
of  the  mind  are  opened,  and  he  longs  to  know,  lie 
braves  the  scorching  heat  of  the  desert  and  the  icy  blasts 
of  the  polar  sea,  but  not  for  food;  he  watches  all  night, 
but  it  is  to  trace  the  circling  of  the  eternal  stars.  He 
adds  toil  to  toil,  to  gratify  a  hunger  no  animal  has  felt; 
to  assuage  a  thirst  no  beast  can  know. 

Out  upon  nature,  in  upon  himself,  back  through  the 
mists  that  shroud  the  past,  forward  into  the  darkness 
that  overhangs  the  future,  turns  the  restless  desire  that 


136  POPULATION   AND   SUBSISTENCE.  Book  11. 

arises  when  the  animal  wants  slumber  in  satisfaction. 
Beneath  things,  he  seeks  the  law;  he  would  know  how 
the  globe  was  forged  and  the  stars  were  hung,  and  trace 
to  their  origins  the  springs  of  life.  And,  then,  as  the 
man  develops  his  nobler  nature,  there  arises  the  desire 
higher  yet — the  passion  of  passions,  the  hope  of  hopes — 
the  desire  that  he,  even  he,  may  somehow  aid  in  making 
life  better  and  brighter,  in  destroying  want  and  sin,  sor- 
row and  shame.  He  masters  and  curbs  the  animal;  he 
turns  his  back  upon  the  feast  and  renounces  the  place  of 
power;  he  leaves  it  to  others  to  accumulate  wealth,  to 
gratify  pleasant  tastes,  to  bask  themselves  in  the  warm 
sunshine  of  the  brief  day.  He  works  for  those  he  never 
saw  and  never  can  see;  for  a  fame,  or  maybe  but  for  a 
scant  justice,  that  can  only  come  long  after  the  clods 
have  rattled  upon  his  coffin  lid.  He  toils  in  the  advance, 
where  it  is  cold,  and  there  is  little  cheer  from  men,  and 
the  stones  are  sharp  and  the  brambles  thick.  Amid  the 
scoffs  of  the  present  and  the  sneers  that  stab  like  knives, 
he  builds  for  the  future;  he  cuts  the  trail  that  progress- 
ive humanity  may  hereafter  broaden  into  a  highroad. 
Into  higher,  grander  spheres  desire  mounts  and  beckons, 
and  a  star  fchat  rises  in  the  east  leads  him  on.  Lo!  the 
pulses  of  the  man  throb  with  the  yearnings  of  the  god — 
he  would  aid  in  the  process  of  the  suns! 

Is  not  the  gulf  too  wide  for  the  analogy  to  span?  Give 
more  food,  open  fuller  conditions  of  life,  and  the  vege- 
table or  animal  can  but  multiply;  the  man  will  develop. 
In  the  one  the  expansive  force  can  but  extend  existence 
in  new  numbers;  in  the  other,  it  will  inevitably  tend  to 
extend  existence  in  higher  forms  and  wider  powers. 
Man  is  an  animal;  but  he  is  an  animal  plus  something 
else.  He  is  the  mythic  earth-tree,  whose  roots  are  in  the 
ground,  but  whose  topmost  branches  may  blossom  in  the 
heavens! 

Whichever  way  it  be  turned,  the  reasoning  by  which 


Chap.  III.  IN-FERENCES   FROM   ANALOGY.  137 

this  theory  of  the  constant  tendency  of  population  to 
press  against  the  limits  of  subsistence  is  supported  shows 
an  unwarranted  assumption,  an  undistributed  middle,  as 
the  logicians  would  say.  Facts  do  not  warrant  it,  anal- 
ogy does  not  countenance  it.  It  is  a  pure  chimera  of 
the  imagination,  such  as  those  that  for  a  long  time  pre- 
vented men  from  recognizing  the  rotundity  and  motion 
of  the  earth.  It  is  just  such  a  theory  as  that  under- 
neath us  everything  not  fastened  to  the  earth  must  fall 
off;  as  that  a  ball  dropped  from  the  mast  of  a  ship  in 
motion  must  fall  behind  the  mast;  as  that  a  live  fish 
placed  in  a  vessel  full  of  water  will  displace  no  water. 
It  is  as  unfounded,  if  not  as  grotesque,  as  an  assumption 
we  can  imagine  Adam  might  have  made  had  he  been  of 
an  arithmetical  turn  of  mind  and  figured  on  the  growth 
of  his  first  baby  from  the  rate  of  its  early  months.  From 
the  fact  that  at  birth  it  weighed  ten  pounds  and  in  eight 
months  thereafter  twenty  pounds,  he  might,  with  the 
arithmetical  knowledge  which  some  sages  have  supposed 
him  to  possess,  have  ciphered  out  a  result  quite  as  strik- 
ing as  that  of  Mr.  Malthus;  namely,  that  by  the  time  it 
got  to  be  ten  years  old  it  would  be  as  heavy  as  an  ox,  at 
twelve  as  heavy  as  an  elephant,  and  at  thirty  would 
weigh  no  less  than  175,716,339,548  tons. 

The  fact  is,  there  is  no  more  reason  for  us  to  trouble 
ourselves  about  the  pressure  of  population  upon  subsist- 
ence than  there  was  for  Adam  to  worry  himself  about  the 
rapid  growth  of  his  baby.  So  far  as  an  inference  is 
really  warranted  by  facts  and  suggested  by  analogy,  it  is 
that  the  law  of  population  includes  such  beautiful  adap- 
tations as  investigation  has  already  shown  in  other 
natural  laws,  and  that  we  are  no  more  warranted  in  as- 
suming that  the  instinct  of  reproduction,  in  the  natural 
development  of  society,  tends  to  produce  misery  and  vice, 
than  we  should  be  in  assuming  that  the  force  of  gravita- 
tion must  hurl  the  moon  to  the  earth  and  the  earth  to  the 


138  POPULATION   AND   SUBSISTENCE.  Book  n. 

sun,  or  than  in  assuming  from  the  contraction  of  water 
with  reductions  of  temperature  down  to  thirty-two 
degrees  that  rivers  and  lakes  must  freeze  to  the  bottom 
with  every  frost,  and  the  temperate  regions  of  earth  be 
thus  rendered  uninhabitable  by  even  moderate  winters. 
That,  besides  the  positive  and  prudential  checks  of  Mal- 
thns,  there  is  a  third  check  which  comes  into  play  with 
the  elevation  of  the  standard  of  comfort  and  the  develop- 
ment of  the  intellect,  is  pointed  to  by  many  well-known 
facts.  The  proportion  of  births  is  notoriously  greater  in 
new  settlements,  where  the  struggle  with  nature  leaves 
little  opportunity  for  intellectual  life,  and  among  the 
poverty-bound  classes  of  older  countries,  who  in  the 
midst  of  wealth  are  deprived  of  all  its  advantages  and  re- 
duced to  all  but  an  animal  existence,  than  it  is  among 
the  classes  to  whom  the  increase  of  wealth  has  brought 
independence,  leisure,  comfort,  and  a  fuller  and  more 
varied  life.  This  fact,  long  ago  recognized  in  the 
homely  adage,  "a  rich  man  for  luck,  and  a  poor  man  for 
children,"  was  noted  by  Adam  Smith,  who  says  it  is  not 
uncommon  to  find  a  poor  half-starved  Highland  woman 
has  been  the  mother  of  twenty-three  or  twenty-four  chil- 
dren, and  is  everywhere  so  clearly  perceptible  that  it  is 
only  necessary  to  allude  to  it. 

If  the  real  law  of  population  is  thus  indicated,  as  I 
think  it  must  be,  then  the  tendency  to  increase,  instead 
of  being  always  uniform,  is  strong  where  a  greater  popu- 
lation would  give  increased  comfort,  and  where  the  per- 
petuity of  the  race  is  threatened  by  the  mortality  in- 
duced by  adverse  conditions;  but  weakens  just  as  the 
higher  development  of  the  individual  becomes  possible 
and  the  perpetuity  of  the  race  is  assured.  In  other 
words,  the  law  of  population  accords  with  and  is  subordi- 
nate to  the  law  of  intellectual  development,  and  any 
danger  that  human  beings  may  be  brought  into  a  world 
where  they  cannot  be  provided  for  arises  not  from  the 


Chap.m.  INFERENCES   FKOM   ANALOGY.  139 

ordinances  of  nature,  but  from  social  mal-adjustments 
that  in  the  midst  of  wealth  condemn  men  to  want.  The 
truth  of  this  will,  I  think,  be  conclusively  demonstrated 
when,  after  having  cleared  the  ground,  we  trace  out  the 
true  laws  of  social  growth.  But  it  would  disturb  the 
natural  order  of  the  argument  to  anticipate  them  now. 
If  I  have  succeeded  in  maintaining  a  negative — in  show- 
ing that  the  Malthusian  theory  is  not  proved  by  the  rea- 
soning by  which  it  is  supported — it  is  enough  for  the 
present.  In  the  next  chapter  I  propose  to  take  the 
affirmative  and  show  that  it  is  disproved  by  facts. 


CHAPTEK  IV. 

DISPROOF  OF  THE   MALTHUSIAN   THEORY. 

So  deeply  rooted  and  thoroughly  entwined  with  the 
reasonings  of  the  current  political  economy  is  this  doc- 
trine that  increase  of  population  tends  to  reduce  wages 
and  produce  poverty,  so  completely  does  it  harmonize 
with  many  popular  notions,  and  so  liable  is  it  to  recur  in 
different  shapes,  that  I  have  thought  it  necessary  to  meet 
and  show  in  some  detail  the  insufficiency  of  the  argu- 
ments by  which  it  is  supported,  before  bringing  it  to  the 
test  of  facts;  for  the  general  acceptance  of  this  theory 
adds  a  most  striking  instance  to  the  many  which  the  his- 
tory of  thought  afEords  of  how  easily  men  ignore  facts 
when  blindfolded  by  a  preaccepted  theory. 

To  the  supreme  and  final  test  of  facts  we  can  easily 
bring  this  theory.  Manifestly  the  question  whether  in- 
crease of  population  necessarily  tends  to  reduce  wages 
and  cause  want,  is  simply  the  question  whether  it  tends 
to  reduce  the  amount  of  wealth  that  can  be  produced  by 
a  given  amount  of  labor. 

This  is  what  the  current  doctrine  holds.  The  accepted 
theory  is,  that  the  more  that  is  required  from  nature  the 
less  generously  does  she  respond,  so  that  doubling  the 
application  of  labor  will  not  double  the  product;  and 
hence,  increase  of  population  must  tend  to  reduce  wages 
and  deepen  poverty,  or,  in  the  phrase  of  Malthus,  must 
result  in  vice  and  misery.  To  quote  the  language  of 
John  Stuart  Mill: 

"A  greater  number  of  people  cannot,  in  any  given  state  of  civili- 


Chap.  IV.      DISPKOOF    OF   THE   MALTHUSIAN"   THEORY,  141 

zation,  be  collectively  so  well  provided  for  as  a  smaller.  The 
niggardliness  of  nature,  not  the  injustice  of  society,  is  the  cause  of 
the  penalty  attached  to  over-population.  An  unjust  distribution  of 
wealth  does  not  aggravate  the  evil,  but,  at  most,  causes  it  be  some- 
what earlier  felt.  It  is  in  vain  to  say  that  all  mouths  which  the  in- 
crease of  mankind  calls  into  existence  bring  with  them  hands.  The 
new  mouths  require  as  much  food  as  the  old  ones,  and  the  hands  do 
not  produce  as  much.  If  all  instruments  of  production  were  held  in 
joint  property  by  the  whole  people,  and  the  produce  divided  with 
perfect  equality  among  them,  and  if  in  a  society  thus  constituted, 
industry  were  as  energetic  and  the  produce  as  ample  as  at  the  present 
time,  there  would  be  enough  to  make  all  the  existing  population  ex- 
tremely comfortable;  but  when  that  population  had  doubled  itself, 
as,  with  existing  habits  of  the  people,  under  such  an  encouragement, 
it  undoubtedly  would  in  little  more  than  twenty  years,  what  would 
then  be  their  condition?  Unless  the  arts  of  production  were  in  the 
same  time  improved  in  an  almost  unexampled  degree,  the  inferior 
soils  which  must  be  resorted  to,  and  the  more  laborious  and  scantily 
remunerative  cultivation  which  must  be  employed  on  the  superior, 
soils,  to  procure  food  for  so  much  larger  a  population,  would,  by  an 
insuperable  necessity,  render  every  individual  in  the  community 
poorer  than  before.  If  the  population  continued  to  increase  at  the 
same  rate,  a  time  would  soon  arrive  when  no  one  would  have  more 
than  mere  necessaries,  and,  soon  after,  a  time  when  no  one  would 
have  a  sufficiency  of  those,  and  the  further  increase  of  population 
would  be  arrested  by  death."  * 

All  this  I  deny.  I  assert  that  the  very  reverse  of  these 
propositions  is  true.  I  assert  that  in  any  given  state  of 
civilization  a  greater  number  of  people  can  collectively 
be  better  provided  for  than  a  smaller.  I  assert  that  the 
injustice  of  society,  not  the  niggardliness  of  nature,  is 
the  cause  of  the  want  and  misery  which  the  current 
theory  attributes  to  over-population.  I  assert  that  the 
new  mouths  which  an  increasing  population  calls  into 
existence  require  no  more  food  than  the  old  ones,  while 
the  hands  they  bring  with  them  can  in  the  natural  order 
of  things  produce  more.  I  assert  that,  other  things  being 
equal,  the  greater  the  population,  the  greater  the  com- 

*  Principles  of  Political  Economy,  Book  I.,  Chap.  XIII.,  Sec.  2. 


142  POPULATION-  AND   SUBSISTENCE.  Book  II. 

fort  which  an  equitable  distribution  of  wealth  would 
give  to  each  individual.  I  assert  that  in  a  state  of 
equality  the  natural  increase  of  population  would  con- 
stantly tend  to  make  every  individual  richer  instead  of 
poorer. 

I  thus  distinctly  join  issue,  and  submit  the  question  to 
the  test  of  facts. 

But  observe  (for  even  at  the  risk  of  repetition  I  wish 
to  warn  the  reader  against  a  confusion  of  thought  that 
is  observable  even  in  writers  of  great  reputation),  that 
the  question  of  fact  into  which  this  issue  resolves  itself  is 
not  in  what  stage  of  population  is  most  subsistence  pro- 
duced? but  in  what  stage  of  population  is  there  exhibited 
the  greatest  power  of  producing  wealth?  For  the  power 
of  producing  wealth  in  any  form  is  the  power  of  produc- 
ing subsistence — and  the  consumption  of  wealth  in  any 
form,  or  of  wealth-producing  power,  is  equivalent  to  the 
consumption  of  subsistence.  I  have,  for  instance,  some 
money  in  my  pocket.  With  it  I  may  buy  either  food  or 
cigars  or  jewelry  or  theater  tickets,  and  just  as  I  expend 
my  money  do  I  determine  labor  to  the  production  of 
food,  of  cigars,  of  jewelry,  or  of  theatrical  representa- 
tions. A  set  of  diamonds  has  a  value  equal  to  so  many 
barrels  of  flour — that  is  to  say,  it  takes  on  the  average  as 
much  labor  to  produce  the  diamonds  as  it  would  to  pro- 
duce so  much  flour.  If  I  load  my  wife  with  diamonds,  it 
is  as  much  an  exertion  of  subsistence-producing  power 
as  though  I  had  devoted  so  much  food  to  purposes  of 
ostentation.  If  I  keep  a  footman,  I  take  a  possible  plow- 
man from  the  plow.  The  breeding  and  maintenance  of 
a  race-horse  require  care  and  labor  which  would  suffice 
for  the  breeding  and  maintenance  of  many  work-horses. 
The  destruction  of  wealth  involved  in  a  general  illumina- 
tion or  the  firing  of  a  salute  is  equivalent  to  the  burning 
up  of  so  much  food;  the  keeping  of  a  regiment  of  sol- 
diers, or  of  a  war-ship  and  her  crew,  is  the  diversion  to 


a.ap.IV.      DISPROOF  OF  THE  MALTHUSIAN  THEORY.  143 

unproductive  uses  of  labor  that  could  produce  subsist- 
ence for  many  thousands  of  peojile.  Thus  the  power  of 
any  population  to  produce  the  necessaries  of  life  is  not 
to  be  measured  by  the  necessaries  of  life  actually  pro- 
duced, but  by  the  expenditure  of  power  in  all  modes. 

There  is  no  necessity  for  abstract  reasoning.  The 
question  is  one  of  simple  fact.  Does  the  relative  power 
of  producing  wealth  decrease  with  the  increase  of  popu- 
lation? 

The  facts  are  so  patent  that  it  is  only  necessary  to  call 
attention  to  them.  We  have,  in  modern  times,  seen 
many  communities  advance  in  population.  Have  they 
not  at  the  same  time  advanced  even  more  rapidly  in 
wealth?  We  see  many  communities  still  increasing  in 
population.  Are  they  not  also  increasing  their  wealth 
still  faster?  Is  there  any  doubt  that  while  England  has 
been  increasing  her  population  at  the  rate  of  two  per 
cent,  per  annum,  her  wealth  has  been  growing  in  still 
greater  proportion?  Is  it  not  true  that  while  the  popu 
lation  of  the  United  States  has  been  doubling  every 
twenty-nine*  years  her  wealth  has  been  doubling  at 
much  shorter  intervals?  Is  it  not  true  that  under  sim- 
ilar conditions — that  is  to  say,  among  communities  of 
similar  people  in  a  similar  stage  of  civilization — the  most 
densely  populated  community  is  also  the  richest?  Are 
not  the  more  densely  populated  Eastern  States  richer  in 
proportion  to  population  than  the  more  sparsely  popu- 
lated Western  or  Southern  States?  Is  not  England, 
where  population  is  even  denser  than  in  the  Eastern 
States  of  the  Union,  also  richer  in  proportion?  Where 
will  you  jBnd  wealth  devoted  with  the  most  lavishness  to 
non-productive  use — costly  buildings,  fine  furniture,  lux- 
urious equipages,  statues,  pictures,  pleasure  gardens  and 
yachts?    Is  it  not    where  population  is  densest  rather 

*  The  rate  up  to  1860  was  35  per  cent,  each  decade. 


144  POPULATION   AND   SUBSISTENCE.  Book  B. 

than  where  it  is  sparsest?  Where  will  you  find  in  largest 
proportion  those  whom  the  general  production  suffices  to 
keep  without  productive  labor  on  their  part — men  of  in- 
come and  of  elegant  leisure,  thieves,  policemen,  menial 
servants,  lawyers,  men  of  letters,  and  the  like?  Is  it  not 
where  population  is  dense  rather  than  where  it  is  sparse? 
Whence  is  it  that  capital  overflows  for  remunerative  in- 
vestment? Is  it  not  from  densely  poijulated  countries  to 
sparsely  populated  countries?  These  things  conclusively 
show  that  wealth  is  greatest  where  population  is  densest; 
that  the  production  of  wealth  to  a  given  amount  of  labor 
increases  as  population  increases.  These  things  are  ap- 
parent wherever  we  turn  our  eyes.  On  the  same  level  of 
civilization,  the  same  stage  of  the  productive  arts,  gov- 
ernment, etc.,  the  most  populous  countries  are  always 
the  most  wealthy. 

Let  us  take  a  particular  case,  and  that  a  case  which  of 
all  that  can  be  cited  seems  at  first  blush  best  to  support 
the  theory  we  are  considering — the  case  of  a  community 
where,  while  population  has  largely  increased,  wages 
have  greatly  decreased,  and  it  is  not  a  matter  of  dubious 
inference  but  of  obvious  fact  that  the  generosity  of 
nature  has  lessened.  That  community  is  California. 
When  upon  the  discovery  of  gold  the  first  wave  of  immi- 
gration poured  into  California  it  found  a  country  in 
which  nature  was  in  the  most  generous  mood.  From 
the  river  banks  and  bars  the  glittering  deposits  of  thou- 
sands of  years  could  be  taken  by  the  most  primitive  appli- 
ances, in  amounts  which  made  an  ounce  ($16)  per  day 
only  ordinary  wages.  The  plains,  covered  with  nutri- 
tious grasses,  were  alive  with  countless  herds  of  horses 
and  cattle,  so  plenty  that  any  traveler  was  at  liberty  to 
shift  his  saddle  to  a  fresh  steed,  or  to  kill  a  bullock  if  he 
needed  a  steak,  leaving  the  hide,  its  only  valuable  part, 
for  the  owner.  From  the  rich  soil  which  came  first 
under  cultivation,  the  mere  plowing  and  sowing  brought 


Chap.  IV.      DISPROOF   OF  THE   MALTHUSIAN   THEORY.  145 

crops  that  in  older  countries,  if  procured  at  all,  can  only 
be  procured  by  the  most  thorough  manuring  and  culti- 
vation. In  early  California,  amid  this  profusion  of 
nature,  wages  and  interest  were  higher  than  anywhere 
else  in  the  world. 

This  virgin  profusion  of  nature  has  been  steadily  giv- 
ing way  before  the  greater  and  greater  demands  which  an 
increasing  population  has  made  upon  it.  Poorer  and 
poorer  diggings  have  been  worked,  until  now  no  dig- 
gings worth  speaking  of  can  be  found,  and  gold  mining 
requires  much  capital,  large  skill,  and  elaborate  machin- 
ery, and  involves  great  risks.  "Horses  cost  money," 
and  cattle  bred  on  the  sage-brush  plains  of  Nevada  are 
brought  by  railroad  across  the  mountains  and  killed  in 
San  Francisco  shambles,  while  farmers  are  beginning  to 
save  their  straw  and  look  for  manure,  and  land  is  in  cul- 
tivation which  will  hardly  yield  a  crop  three  years  out 
of  four  without  irrigation.  At  the  same  time  wages  and 
interest  have  steadily  gone  down.  Many  men  are  now 
glad  to  work  for  a  week  for  less  than  they  once  demanded 
for  the  day,  and  money  is  loaned  by  the  year  for  a  rate 
which  once  would  hardly  have  been  thought  extortionate 
by  the  month.  Is  the  connection  between  the  reduced 
productiveness  of  nature  and  the  reduced  rate  of  wages 
that  of  cause  and  effect?  Is  it  true  that  wages  are  lower 
because  labor  yields  less  wealth?  On  the  contrary!  In- 
stead of  the  wealth-producing  power  of  labor  being  less 
in  California  in  1879  than  in  1849,  I  am  convinced  that 
it  is  greater.  And,  it  seems  to  me,  that  no  one  who 
considers  how  enormously  during  these  years  the  effici- 
ency of  labor  in  California  has  been  increased  by  roads, 
wharves,  flumes,  railroads,  steamboats,  telegraphs,  and 
machinery  of  all  kinds;  by  a  closer  connection  with  the 
rest  of  the  world;  and  by  the  numberless  economies  re- 
sulting from  a  larger  population,  can  doubt  that  the 
return  which  labor  receives  from  nature  in  California  is 


146  POPULATIOiir   AKD   SUBSISTENCE.  Booh  II. 

on  the  whole  much  greater  now  than  it  was  in  the  days  of 
unexhausted  placers  and  virgin  soil — the  increase  in  the 
power  of  the  human  factor  having  more  than  compen- 
sated for  the  decline  in  the  power  of  the  natural  factor. 
That  this  conclusion  is  the  correct  one  is  proved  by  many 
facts  which  show  that  the  consumption  of  wealth  is  now 
much  greater,  as  compared  with  the  number  of  laborers, 
than  it  was  then.  Instead  of  a  population  composed  al- 
most exclusively  of  men  in  the  prime  of  life,  a  large  pro- 
portion of  women  and  children  are  now  supported,  and 
other  non-producers  have  increased  in  much  greater  ratio 
than  the  population;  luxury  has  grown  far  more  than 
wages  have  fallen;  where  the  best  houses  were  cloth  and 
paper  shanties,  are  now  mansions  whose  magnificence 
rivals  European  palaces;  there  are  liveried  carriages  on 
the  streets  of  San  Francisco  and  pleasure  yachts  on  her 
bay;  the  class  who  can  live  sumptuously  on  their  incomes 
has  steadily  grown;  there  are  rich  men  beside  whom  the 
richest  of  the  earlier  years  would  seem  little  better  than 
paupers — in  short,  there  are  on  every  hand  the  most 
striking  and  conclusive  evidences  that  the  production 
and  consumption  of  wealth  have  increased  with  even 
greater  rapidity  than  the  increase  of  population,  and  that 
if  any  class  obtains  less  it  is  solely  because  of  the  greater 
inequality  of  distribution. 

.  What  is  obvious  in  this  particular  instance  is  obvious 
where  the  survey  is  extended.  The  richest  countries 
are  not  those  where  nature  is  most  prolific;  but  those 
where  labor  is  most  eflScient — not  Mexico,  but  Massa- 
chusetts; not  Brazil,  but  England.  The  countries  where 
population  is  densest  and  presses  hardest  upon  the  capa- 
bilities of  nature,  are,  other  things  being  equal,  the 
countries  where  the  largest  proportion  of  the  produce 
can  be  devoted  to  luxury  and  the  support  of  non-pro- 
ducers, the  countries  where  capital  overflows,  the  coun- 
tries  that   upon  exigency,  such  as  war,  can  stand   the 


Chap.  TV.      DISPROOF   OF   THE    MALTHUSIAN   THEORY.  147 

greatest  drain.  That  the  production  of  wealth  must,  in 
proportion  to  the  labor  employed,  be  greater  in  a  densely- 
populated  country  like  England  than  in  new  countries 
where  wages  and  interest  are  higher,  is  evident  from  the 
fact  that,  though  a  much  smaller  proportion  of  the  popu- 
lation is  engaged  in  productive  labor,  a  much  larger  sur- 
plus is  available  for  other  purposes  than  that  of  supplying 
physical  needs.  In  a  new  country  the  whole  available 
force  of  the  community  is  devoted  to  production — there 
is  no  well  man  who  does  not  do  productive  work  of  some 
kind,  no  well  woman  exempt  from  household  tasks. 
There  are  no  paupers  or  beggars,  no  idle  rich,  no  class 
whose  labor  is  devoted  to  ministering  to  the  convenience 
or  caprice  of  the  rich,  no  purely  literary  or  scientific 
class,  no  criminal  class  who  live  by  preying  upon  society, 
no  large  class  maintained  to  guard  society  against  them. 
Yet  with  the  whole  force  of  the  community  thus  devoted 
to  production,  no  such  consumption  of  wealth  in  propor- 
tion to  the  whole  population  takes  place,  or  can  be 
afforded,  as  goes  on  in  the  old  country;  for,  though  the 
condition  of  the  lowest  class  is  better,  and  there  is  no  one 
who  cannot  get  a  living,  there  is  no  one  who  gets  much 
more — few  or  none  who  can  live  in  anything  like  what 
would  be  called  luxury,  or  even  comfort,  in  the  older 
country.  That  is  to  say,  that  in  the  older  country  the 
consumption  of  wealth  in  proportion  to  population  is 
greater,  although  the  proportion  of  labor  devoted  to  the 
production  of  wealth  is  less — or  that  fewer  laborers  pro- 
duce more  wealth;  for  wealth  must  be  produced  before  it 
can  be  consumed. 

It  may,  however,  be  said,  that  the  superior  wealth  of 
older  countries  is  due  not  to  superior  productive  power, 
but  to  the  accumulations  of  wealth  which  the  new  country 
has  not  yet  had  time  to  make. 

It  will  be  well  for  a  moment  to  consider  this  idea  of 
accumulated  wealth.     The  truth  is,  that  wealth  can  be 


148  POPULATION   AND   SUBSISTENCE.  Boole  II. 

accumulated  but  to  a  slight  degree,  and  that  communities 
really  live,  as  the  vast  majority  of  individuals  live,  from 
hand  to  mouth.  Wealth  will  not  bear  much  accumula- 
tion; except  in  a  few  unimportant  forms  it  will  not  keep. 
The  matter  of  the  universe,  which,  when  worked  up  by 
labor  into  desirable  forms,  constitutes  wealth,  is  con- 
stantly tending  back  to  its  original  state.  Some  forms 
of  wealth  will  last  for  a  few  hours,  some  for  a  few  days, 
some  for  a  few  months,  some  for  a  few  years;  and  there 
are  very  few  forms  of  wealth  that  can  be  passed  from  one 
generation  to  another.  Take  wealth  in  some  of  its  most 
useful  and  permanent  forms — ships,  houses,  railways, 
machinery.  Unless  labor  is  constantly  exerted  in  pre- 
serving and  renewing  them,  they  will  almost  immediately 
become  useless.  Stop  labor  in  any  community,  and 
wealth  would  vanish  almost  as  the  jet  of  a  fountain 
vanishes  when  the  flow  of  water  is  shut  ofE.  Let  labor 
again  exert  itself,  and  wealth  will  almost  as  immediately 
reappear.  This  has  been  long  noticed  where  war  or 
other  calamity  has  swept  away  wealth,  leaving  population 
unimpaired.  There  is  not  less  wealth  in  London  to-day 
because  of  the  great  fire  of  1666;  nor  yet  is  there  less 
wealth  in  Chicago  because  of  the  great  fire  of  1870.  On 
those  fire-swept  acres  have  arisen,  under  the  hand  of 
labor,  more  magnificent  buildings,  filled  with  greater 
stocks  of  goods;  and  the  stranger  who,  ignorant  of  the 
history  of  the  city,  passes  along  those  stately  avenues 
would  not  dream  that  a  few  years  ago  all  lay  so  black  and 
bare.  The  same  principle — that  wealth  is  constantly  re- 
created— is  obvious  in  every  new  city.  Given  the  same 
population  and  the  same  eflBciency  of  labor,  and  the  town 
of  yesterday  will  possess  and  enjoy  as  much  as  the  town 
founded  by  the  Romans.  No  one  who  has  seen  Mel- 
bourne or  San  Francisco  can  doubt  that  if  the  population 
of  England  were  transported  to  New  Zealand,  leaving  all 
accumulated  wealth  behind,  New  Zealand  would  soon  be 


Chap.  IV.      DISPROOF   OF   THE   MALTHUSIAN   THEORY.  149 

as  rich  as  England  is  now;  or,  conversely,  that  if  the 
population  of  England  were  reduced  to  the  sparseness  of 
the  present  population  of  New  Zealand,  in  spite  of  accu- 
mulated wealth,  they  would  soon  be  as  poor.  Accumu- 
lated wealth  seems  to  play  just  about  such  a  part  in  rela- 
tion to  the  social  organism  as  accumulated  nutriment 
does  to  the  physical  organism.  Some  accumulated  wealth 
is  necessary,  and  to  a  certain  extent  it  may  be  drawn 
upon  in  exigencies;  but  the  wealth  produced  by  past  gen- 
erations can  no  more  account  for  the  consumption  of 
the  present  than  the  dinners  he  ate  last  year  can  supply  a 
man  with  present  strength. 

But  without  these  considerations,  which  I  allude  to 
more  for  their  general  than  for  their  special  bearing,  it 
is  evident  that  superior  accumulations  of  wealth  can  ac- 
count for  greater  consumption  of  wealth  only  in  cases  where 
accumulated  wealth  is  decreasing,  and  that  wherever  the 
volume  of  accumulated  wealth  is  maintained,  and  even 
more  obviously  where  it  is  increasing,  a  greater  consump- 
tion of  wealth  must  imply  a  greater  production  of 
wealth.  Now,  whether  we  compare  different  communi- 
ties with  each  other,  or  the  same  community  at  different 
times,  it  is  obvious  that  the  progressive  state,  which  is 
marked  by  increase  of  population,  is  also  marked  by  an 
increased  consumption  and  an  increased  accumulation  of 
wealth,  not  merely  in  the  aggregate,  but  per  capita. 
And  hence,  increase  of  population,  so  far  as  it  has  yet 
anywhere  gone,  does  not  mean  a  reduction,  but  an  in- 
crease in  the  average  production  of  wealth. 

And  the  reason  of  this  is  obvious.  For,  even  if  the 
increase  of  population  does  reduce  the  power  of  the 
natural  factor  of  wealth,  by  compelling  a  resort  to  poorer 
soils,  etc.,  it  yet  so  vastly  increases  the  power  of  the 
human  factor  as  more  than  to  compensate.  Twenty 
men  working  together  will,  where  nature  is  niggardly, 
produce  more  than  twenty  times  the  wealth  that  one  man 


150  POPULATIOK    AND    SUBSISTENCE.  Book  II. 

can  produce  where  nature  is  most  bountiful.  The  denser 
the  population  the  more  minute  becomes  the  subdivision 
of  labor,  the  greater  the  economies  of  production  and 
distribution,  and,  hence,  the  very  reverse  of  the  Malthu- 
sian  doctrine  is  true;  and,  within  the  limits  in  which  we 
have  reason  to  suppose  increase  would  still  go  on,  in  any 
given  state  of  civilization  a  greater  number  of  people  can 
produce  a  larger  proportionate  amount  of  wealth,  and 
more  fully  supply  their  wants,  than  can  a  smaller 
number. 

Look  simply  at  the  facts.  Can  anything  be  clearer 
than  that  the  cause  of  the  poverty  which  festers  in  the 
centers  of  civilization  is  not  in  the  weakness  of  the  pro- 
ductive forces?  In  countries  where  poverty  is  deepest, 
the  forces  of  production  are  evidently  strong  enough,  if 
fully  employed,  to  provide  for  the  lowest  not  merely 
comfort  but  luxury.  The  industrial  paralysis,  the  com- 
mercial depression  which  curses  the  civilized  world  to-day, 
evidently  springs  from  no  lack  of  productive  power. 
Whatever  be  the  trouble,  it  is  clearly  not  in  the  want  of 
ability  to  produce  wealth. 

It  is  this  very  fact — that  want  appears  where  produc- 
tive power  is  greatest  and  the  production  of  wealth  is 
largest — that  constitutes  the  enigma  which  perplexes  the 
civilized  world,  and  which  we  are  trying  to  unravel. 
Evidently  the  Malthusian  theory,  which  attributes  want 
to  the  decrease  of  productive  power,  will  not  explain  it. 
That  theory  is  utterly  inconsistent  with  all  the  facts.  It 
is  really  a  gratuitous  attribution  to  the  laws  of  God  of 
results  which,  even  from  this  examination,  we  may  infer 
really  spring  from  the  mal-adjustraents  of  men — an  infer- 
ence which,  as  we  proceed,  will  become  a  demonstration. 
For  we  have  yet  to  find  what  does  produce  poverty  amid 
advancing  wealth. 


BOOK  III. 

THE  LAWS  OF  DISTRIBUTION. 


CHAPTER  I. — THE   INQUIRY   In'AEROWED   TO     THE    LAWS 

OF  DISTRIBUTION" — KECESSARY  RELA- 
TION  OF   THESE   LAWS. 

■RENT   AND  THE   LAW   OF   RENT. 

INTEREST   AND   THE    CAUSE    OF  INTEREST. 

-OF  SPURIOUS  CAPITAL  AND  OF  PROFITS 
OFTEN   MISTAKEN    FOR   INTEREST. 

THE    LAW   OF   INTEREST. 

WAGES    AND   THE   LAW   OF   WAGES. 

•CORRELATION  AND  CO-ORDINATION  OF 
THESE    LAWS. 

THE  STATICS  OF  THE  PROBLEM  THUS 
EXPLAINED. 


CHAPTER  II. 

CHAPTER  III. 

CHAPTER  lY. 

CHAPTER  V. 

CHAPTER  TI. 

CHAPTER  VII. 

CHAPTER  VIII. — ' 


The  machines  that  are  first  invented  to  perform  any  particular 
movement  are  always  the  most  complex,  and  succeeding  artists 
generally  discover  that  with  fewer  wheels,  with  fewer  principles  of 
motion  than  had  originally  been  employed,  the  same  effects  may  be 
more  easily  produced.  The  first  philosophical  systems,  in  the  same 
manner,  are  always  the  most  complex,  and  a  particular  connecting 
chain,  or  principle,  is  generally  thought  necessary  to  unite  every  two 
seemingly  disjointed  appearances;  but  it  often  happens  that  one 
great  connecting  princiijle  is  afterward  found  to  be  suflicient  to  bind 
together  all  the  discordant  phenomena  that  occur  in  a  whole  species 
of  things. — Adam  Smith,  Essay  on  the  Principles  loMch  Lead  and 
Direct  Philosophical  Inquiries,  as  Illustrated  by  the  History  of 
Astronomy. 


CHAPTER  I. 

THE    INQUIRY    NARROWED    TO    THE     LAWS  OF     DISTRIBU- 
TION— THE   NECESSARY    RELATION    OF   THESE   LAWS. 

The  preceding  examination  has,  I  think,  conclusively 
shown  that  the  explanation  currently  given,  in  the  name 
of  political  economy,  of  the  problem  we  are  attempting 
to  solve,  is  no  explanation  at  all. 

That  with  material  progress  wages  fail  to  increase,  but 
rather  tend  to  decrease,  cannot  be  explained  by  the  theory 
that  the  increase  of  laborers  constantly  tends  to  divide 
into  smaller  portions  the  capital  sum  from  which  wages 
are  paid.  For,  as  we  have  seen,  wages  do  not  come  from 
capital,  but  are  the  direct  produce  of  labor.  Each  pro- 
ductive laborer,  as  he  works,  creates  his  wages,  and  with 
every  additional  laborer  there  is  an  addition  to  the  true 
wages  fund — an  addition  to  the  common  stock  of  wealth, 
which,  generally  speaking,  is  considerably  greater  than 
the  amount  he  draws  in  wages. 

Nor,  yet,  can  it  be  explained  by  the  theory  that  nature 
yields  less  to  the  increasing  drafts  which  an  increasing 
population  make  upon  her;  for  the  increased  efficiency 
of  labor  makes  the  progressive  state  a  state  of  continually 
increasing  production  per  capita,  and  the  countries  of 
densest  population,  other  things  being  equal,  are  always 
the  countries  of  greatest  wealth. 

So  far,  we  have  only  increased  the  perplexities  of  the 
problem.  We  have  overthrown  a  theory  which  did,  in 
some  sort  of  fashion,  explain  existing  facts;  but  in  doing 
so  have  only  made  existing  facts  seem  more  inexplicable. 
It  is  as  though,  while  the  Ptolemaic  theory  was  yet  in 


154  THE   LAWS   OF   DISTRIBUTION.  Book  HI. 

its  strength,  it  had  been  proved  simply  that  the  sun  and 
stars  do  not  revolve  about  the  earth.  The  phenomena 
of  day  and  night,  and  of  the  apparent  motion  of  the 
celestial  bodies,  would  yet  remain  unexplained,  inevitably 
to  reinstate  the  old  theory  unless  a  better  one  took 
its  place.  Our  reasoning  has  led  us  to  the  conclusion 
that  each  productive  laborer  produces  his  own  wages,  and 
that  increase  in  the  number  of  laborers  should  increase 
the  wages  of  each;  whereas,  the  apparent  facts  are  that 
there  are  many  laborers  who  cannot  obtain  remunerative 
employment,  and  that  increase  in  the  number  of  laborers 
brings  diminution  of  wages.  We  have,  in  short,  proved 
that  wages  ought  to  be  highest  where  in  reality  they  are 
lowest. 

Nevertheless,  even  in  doing  this  we  have  made  some 
progress.  Next  to  finding  what  we  look  for,  is  to  dis- 
cover where  it  is  useless  to  look.  We  hav^  at  least  nar- 
rowed the  field  of  inquiry.  For  this,  at  least,  is  now 
clear — that  the  cause  which,  in  spite  of  the  enormous 
increase  of  productive  power,  confines  the  great  body  of 
producers  to  the  least  share  of  the  product  upon  which 
they  will  consent  to  live,  is  not  the  limitation  of  capital, 
nor  yet  the  limitation  of  the  powers  of  nature  which 
respond  to  labor.  As  it  is  not,  therefore,  to  be  found  in 
the  laws  which  bound  the  production  of  wealth,  it  must 
be  sought  in  the  laws  which  govern  distribution.  To 
them  let  us  turn. 

It  will  be  necessary  to  review  in  its  main  branches  the 
whole  subject  of  the  distribution  of  wealth.  To  discover 
the  cause  which,  as  population  increases  and  the  produc- 
tive arts  advance,  deepens  the  poverty  of  the  lowest 
class,  we  must  find  the  law  which  determines  what  part 
of  the  produce  is  distributed  to  labor  as  wages.  To  find 
the  law  of  wages,  or  at  least  to  make  sure  when  we  have 
found  it,  we  must  also  determine  the  laws  which  fix  the 


Chap.  I.  THEIR   NECESSARY    RELATIO]Sr.  155 

part  01  the  produce  which  goes  to  capital  and  the  part 
which  goes  to  land  owners,  for  as  land,  labor,  and  capital 
join  in  producing  wealth,  it  is  between  these  three  that 
the  produce  must  be  divided.  What  is  meant  by  the 
produce  or  production  of  a  community  is  the  sum  of  the 
wealth  produced  by  that  community — the  general  fund 
from  which,  as  long  as  previously  existing  stock  is  not 
lessened,  all  consumption  must  be  met  and  all  revenues 
drawn.  As  I  have  already  explained,  production  does 
not  merely  mean  the  making  of  things,  but  includes  the 
increase  of  value  gained  by  transporting  or  exchanging 
things.  There  is  a  produce  of  wealth  in  a  purely  com- 
mercial community,  as  there  is  in  a  purely  agricultural 
or  manufacturing  community;  and  in  the  one  case,  as  in 
the  others,  some  part  of  this  produce  will  go  to  capital, 
some  part  to  labor,  and  some  part,  if  land  have  any  value, 
to  the  owners  of  land.  As  a  matter  of  fact,  a  portion  of 
the  wealth  produced  is  constantly  going  to  the  replace- 
ment of  capital,  which  is  constantly  consumed  and  con- 
stantly replaced.  But  it  is  not  necessary  to  take  this  into 
account,  as  it  is  eliminated  by  considering  capital  as 
continuous,  which,  in  speaking  or  thinking  of  it,  we 
habitually  do.  When  we  speak  of  the  produce,  we  mean, 
therefore,  that  part  of  the  wealth  produced  above  what  is 
necessary  to  replace  the  capital  consumed  in  production; 
and  when  we  speak  of  interest,  or  the  return  to  capital, 
we  mean  what  goes  to  capital  after  its  replacement  or 
maintenance. 

It  is,  further,  a  matter  of  fact,  that  in  every  commu- 
nity which  has  passed  the  most  primitive  stage  some 
portion  of  the  produce  is  taken  in  taxation  and  con- 
sumed by  government.  But  it  is  not  necessary,  in  seek- 
ing the  laws  of  distribution,  to  take  this  into  considera- 
tion. We  may  consider  taxation  either  as  not  existing, 
or  as  by  so  much  reducing  the  produce.  And  so,  too,  of 
what  is  taken  from  the  produce  by  certain  forms  of  mon- 


156  THE   LAWS   OF   DISTRIBUTION".  Book  III. 

opoly,  which  will  be  considered  in  a  subsequent  chapter 
(Chap.  IV),  and  which  exercise  powers  analogous  to  tax- 
ation. After  we  have  discovered  the  laws  of  distribution 
we  can  then  see  what  bearing,  if  any,  taxation  has  upon 
them. 

"We  must  discover  these  laws  of  distribution  for  our- 
selves— or,  at  least,  two  out  of  the  three.  For,  that  they 
are  not,  at  least  as  a  whole,  correctly  apprehended  by  the 
current  political  economy,  may  be  seen,  irrespective  of 
our  preceding  examination  of  one  of  them,  in  any  of 
the  standard  treatises. 

This  is  evident,  in  the  first  place,  from  the  terminol- 
ogy employed. 

In  all  politico-economic  works  we  are  told  that  the 
three  factors  in  production  are  land,  labor,  and  capital, 
and  that  the  whole  produce  is  primarily  distributed  into 
three  corresponding  parts.  Three  terms,  therefore,  are 
needed,  each  of  which  shall  clearly  express  one  of  these 
parts  to  the  exclusion  of  the  others.  Kent,  as  defined, 
clearly  enough  expresses  the  first  of  these  parts — that 
which  goes  to  the  owners  of  lando  Wages,  as  defined, 
clearly  enough  expresses  the  second — that  part  which 
constitutes  the  return  to  labor.  But  as  to  the  third 
term — that  which  should  express  the  return  to  capital — 
there  is  in  the  standard  works  a  most  puzzling  ambiguity 
and  confusion. 

Of  words  in  common  use,  that  which  comes  nearest  to 
exclusively  expressing  the  idea  of  return  for  the  use  of 
capital,  is  interest,  which,  as  commonly  used,  implies 
the  return  for  the  use  of  capital,  exclusive  of  any  labor 
in  its  use  or  management,  and  exclusive  of  any  risk,  ex- 
cept such  as  may  be  involved  in  the  security.  The  word 
profits,  as  commonly  used,  is  almost  synonymous  with 
revenue;  it  means  a  gain,  an  amount  received  in  excess 
of  an  amount  expended,  and  frequently  includes  receipts 
that  are  properly  rent;  while  it  nearly  always  includes 


Chap.  I.  THEIR   NECESSARY   RELATION.  157 

receipts  which  are  properly  wages,  as  well  as  compensa- 
tions for  the  risk  peculiar  to  the  various  uses  of  capital. 
Unless  extreme  violence  is  done  to  the  meaning  of  the 
word,  it  cannot,  therefore,  be  used  in  political  economy 
to  signify  that  share  of  the  produce  which  goes  to  capi- 
tal, in  contradistinction  to  those  parts  which  go  to  labor 
and  to  land  owners. 

Now,  all  this  is  recognized  in  the  standard  works  on 
political  economy.  Adam  Smith  well  illustrates  how 
wages  and  compensation  for  risk  largely  enter  into  prof- 
its, pointing  out  how  the  large  profits  of  apothecaries 
and  small  retail  dealers  are  in  reality  wages  for  their 
labor,  and  not  interest  on  their  capital;  and  how  the 
great  profits  sometimes  made  in  risky  businesses,  such  as 
smuggling  and  the  lumber  trade,  are  really  but  compen- 
sations for  risk,  which,  in  the  long  run,  reduce  the 
returns  to  capital  so  used  to  the  ordinary,  or  below  the 
ordinary,  rate.  Similar  illustrations  are  given  in  most  of 
the  subsequent  works,  where  profit  is  formally  defined  in 
its  common  sense,  with,  perhaps,  the  exclusion  of  rent. 
In  all  these  works,  the  reader  is  told  that  profits  are 
made  up  of  three  elements — wages  of  superintendence, 
compensation  for  risk,  and  interest,  or  the  return  for  the 
use  of  capital. 

Thus,  neither  in  its  common  meaning  nor  in  the  mean- 
ing expressly  assigned  to  it  in  the  current  political  econ- 
omy, can  profits  have  any  place  in  the  discussion  of  the 
distribution  of  wealth  between  the  three  factors  of  pro- 
duction. Either  in  its  common  meaning  or  in  the  mean- 
ing expressly  assigned  to  it,  to  talk  about  the  distribution 
of  wealth  into  rent,  wages,  and  profits  is  like  talking  of 
the  division  of  mankind  into  men,  women,  and  human 
beings. 

Yet  this,  to  the  utter  bewilderment  of  the  reader,  is 
what  is  done  in  all  the  standard  works.  After  formally 
decomposing  profits  into  wages  of  superintendence,  com- 


158  THE   LAWS  OF   DISTRIBUTION.  Book  III. 

pensation  for  risk,  and  interest — the  net  return  for  the 
use  of  capital — they  proceed  to  treat  of  the  distribution 
of  wealth  between  the  rent  of  land,  the  wages  of  labor, 
and  the  peofits  of  capital. 

I  doubt  not  that  there  are  thousands  of  men  who  have 
vainly  puzzled  their  brains  over  this  confusion  of  terms, 
and  abandoned  the  effort  ia  despair,  thinking  that  as  the 
fault  could  not  be  in  such  great  thinkers,  it  must  be  in 
their  own  stupidity.  If  it  is  any  consolation  to  such  men 
they  may  turn  to  Buckle's ''History  of  Civilization,"  and 
see  how  a  man  who  certainly  got  a  marvelously  clear  idea 
of  what  he  read,  and  who  had  read  carefully  the  principal 
economists  from  Smith  down,  was  inextricably  confused 
by  this  jumble  of  profits  and  interest.  For  Buckle  (Vol. 
1,  Chap.  II,  and  notes)  persistently  speaks  of  the  dis- 
tribution of  wealth  into  rent,  wages,  interest,  and  profits. 

And  this  is  not  to  be  wondered  at.  For,  after 
formally  decomposing  profits  into  wages  of  superintend- 
ence, insurance,  and  interest,  these  economists,  in  as- 
signing causes  which  fix  the  general  rate  of  profit,  speak 
of  things  which  evidently  affect  only  that  part  of  profits 
which  they  have  denominated  interest;  and  then,  in 
speaking  of  the  rate  of  interest,  either  give  the  meaning- 
less formula  of  supply  and  demand,  or  speak  of  causes 
which  affect  the  compensation  for  risk;  evidently  using 
the  word  in  its  common  sense,  and  not  in  the  economic 
sense  they  have  assigned  to  it,  from  which  compensation 
for  risk  is  eliminated.  If  the  reader  will  take  up  John 
Stuart  Mill's  "Principles  of  Political  Economy,"  and 
compare  the  chapter  on  Profits  (Book  II,  Chap.  15)  with 
the  chapter  on  Interest  (Book  III,  Chap.  23),  he  will  see 
the  confusion  thus  arising  exemplified  in  the  case  of  the 
most  logical  of  English  economists,  in  a  more  striking 
manner  than  I  would  like  to  characterize. 

Now,  such  men  have  not  been  led  into  such  confusion 
of  thought  without  a  cause.     If  they,  one  after  another. 


Cliap.I.  THEIR   NECESSARY    RELATIOif.  159 

have  followed  Dr.  Adam  Smith,  as  boys  play  "follow  my 
leader,"  jumping  where  he  jumped,  and  falling  where 
he  fell,  it  has  been  that  there  was  a  fence  where  he 
jumped  and  a  hole  where  he  fell. 

The  difficulty  from  which  this  confusion  has  sprung  is 
in  the  preaccepted  theory  of  wages.  For  reasons  which 
I  have  before  assigned,  it  has  seemed  to  them  a  self- 
evident  truth  that  the  wages  of  certain  classes  of  laborers 
depended  upon  the  ratio  between  capital  and  the  num- 
ber of  laborers.  But  there  are  certain  kinds  of  reward 
for  exertion  to  which  this  theory  evidently  will  not 
apply,  so  the  term  wages  has  in  use  been  contracted  to 
include  only  wages  in  the  narrow  common  sense.  This 
being  the  case,  if  the  term  interest  were  used,  as  consist- 
ently with  their  definitions  it  should  have  been  used,  to 
represent  the  third  part  of  the  division  of  the  produce, 
all  rewards  of  personal  exertion,  save  those  of  what  are 
commonly  called  wage-workers,  would  clearly  have  been 
left  out.  But  by  treating  the  division  of  wealth  as  be- 
tween rent,  wages,  and  profits,  instead  of  between  rent, 
wages,  and  interest,  this  difficulty  is  glossed  over,  all 
wages  which  will  not  fall  under  the  preaccepted  law  of 
wages  being  vaguely  grouped  under  profits,  as  wages  of 
superintendence. 

To  read  carefully  what  economists  say  about  the  dis- 
tribution of  wealth  is  to  see  that,  though  they  correctly 
define  it,  wages,  as  they  use  it  in  this  connection,  is  what 
logicians  would  call  an  undistributed  terra — it  does  not 
mean  all  wages,  but  only  some  wages — viz.,  the  wages  of 
manual  labor  paid  by  an  employer.  So  other  wages  are 
thrown  over  with  the  return  to  capital,  and  included 
under  the  term  profits,  and  any  clear  distinction  between 
the  returns  to  capital  and  the  returns  to  human  exertion 
thus  avoided.  The  fact  is  that  the  current  political  econ- 
omy fails  to  give  any  clear  and  consistent  account  of  the 
distribution  of  wealth.    The  law  of  rent  is  clearly  stated, 


160  THE   LAWS   OF   DISTRIBUTION.  Boole  III. 

but  it  stands  unrelated.  The  rest  is  a  confused  and 
incoherent  jumble. 

The  very  arrangement  of  these  works  shows  this  con- 
fusion and  inconclusiveness  of  thought.  In  no  politico- 
economic  treatise  that  I  know  of  are  these  laws  of  dis- 
tribution brought  together,  so  that  the  reader  can  take 
them  in  at  a  glance  and  recognize  their  relation  to  each 
other;  but  what  is  said  about  each  one  is  enveloped  in  a 
mass  of  political  and  moral  reflections  and  dissertations. 
And  the  reason  is  not  far  to  seek.  To  bring  together  the 
three  laws  of  distribution  as  they  are  now  taught,  is  to 
show  at  a  glance  that  they  lack  necessary  relation. 

The  laws  of  the  distribution  of  wealth  are  obviously 
laws  of  proportion,  and  must  be  so  related  to  each  other 
that  any  two  being  given  the  third  may  be  inferred. 
For  to  say  that  one  of  the  three  parts  of  a  whole  is  in- 
creased or  decreased,  is  to  say  that  one  or  both  of  the 
other  parts  is,  reversely,  decreased  or  increased.  If  Tom, 
Dick,  and  Harry  are  partners  in  business,  the  agreement 
which  fixes  the  share  of  one  in  the  profits  must  at  the 
same  time  fix  either  the  separate  or  the  joint  shares  of 
the  other  two.  To  fix  Tom's  share  at  forty  per  cent,  is 
to  leave  but  sixty  per  cent,  to  be  divided  between  Dick 
and  Harry.  To  fix  Dick's  share  at  forty  per  cent,  and 
Harry's  share  at  thirty-five  per  cent,  is  to  fix  Tom's  share 
at  twenty-five  per  cent. 

But  between  the  laws  of  the  distribution  of  wealth,  as 
laid  down  in  the  standard  works,  there  is  no  such  rela- 
tion. If  we  fish  them  out  and  bring  them  together,  we 
find  them  to  be  as  follows: 

Wages  are  determined  by  the  ratio  between  the  amount 
of  capital  devoted  to  the  payment  and  subsistence  of 
labor  and  the  number  of  laborers  seeking  employment. 

Rent  is  determined  by  the  margin  of  cultivation;  all 
lands  yielding  as  rent  that  part  of  their  produce  which 
exceeds  what  an  equal  application  of  labor  and  capital 
could  procure  from  the  poorest  land  in  use. 


Chap.  I.  THEIR  NECESSARY   RELATION.  161 

Interest  is  determined  by  the  equation  between  the  de- 
mands of  borrowers  and  the  supply  of  capital  offered  by 
lenders.  Or,  if  we  take  what  is  given  as  the  law  of  prof- 
its, it  is  determined  by  wages,  falling  as  wages  rise  and  ris- 
ing as  wages  fall — or,  to  use  the  phrase  of  Mill,  by  the 
cost  of  labor  to  the  capitalist. 

The  bringing  together  of  these  current  statements  of 
the  laws  of  the  distribution  of  wealth  shows  at  a  glance 
that  they  lack  the  relation  to  each  other  which  the  true 
laws  of  distribution  must  have.  They  do  not  correlate 
and  co-ordinate.  Hence,  at  least  two  of  these  three  laws 
are  either  wrongly  apprehended  or  wrongly  stated.  This 
tallies  with  what  we  have  already  seen,  that  the  current 
apprehension  of  the  law  of  wages,  and,  inferentially,  of 
the  law  of  interest,  will  not  bear  examination.  Let  us, 
then,  seek  the  true  laws  of  the  distribution  of  the  prod- 
uce of  labor  into  wages,  rent,  and  interest.  The  proof 
that  we  have  found  them  will  be  in  their  correlation — 
that  they  meet,  and  relate,  and  mutually  bound  each 
other. 

With  profits  this  inquiry  has  manifestly  nothing  to  do. 
We  want  to  find  what  it  is  that  determines  the  division 
of  their  joint  produce  between  land,  labor,  and  capital; 
and  profits  is  not  a  term  that  refers  exclusively  to  any 
one  of  these  three  divisions.  Of  the  three  parts  into 
which  profits  are  divided  by  political  economists — 
namely,  compensation  for  risk,  wages  of  superintendence, 
and  return  for  the  use  of  capital — the  latter  falls  under 
the  term  interest,  which  includes  all  the  returns  for  the 
use  of  capital,  and  excludes  everything  else;  wages  of  su- 
perintendence falls  under  the  term  wages,  which  includes 
all  returns  for  human  exertion,  and  excludes  everything 
else;  and  compensation  for  risk  has  no  place  whatever,  as 
risk  is  eliminated  when  all  the  transactions  of  a  commu- 
nity are  taken  together.  I  shall,  therefore,  consistently 
with  the  definitions  of  political  economists,  use  the  term 


163  THE   LAWS  OF   DISTRIBUTION".  Book  IIL 

interest  as  signifying  that  part  of  the  produce  which  goes 
to  capital. 

To  recapitulate: 

Land,  labor,  and  capital  are  the  factors  of  production. 
The  term  land  includes  all  natural  opportunities  or 
forces;  the  term  labor,  all  human  exertion;  and  the  term 
capital,  all  wealth  used  to  produce  more  wealth.  In  re- 
turns to  these  three  factors  is  the  whole  produce  dis- 
tributed. That  part  which  goes  to  land  owners  as  pay- 
ment for  the  use  of  natural  opportunities  is  called  rent; 
that  part  which  constitutes  the  reward  of  human  exer- 
tion is  called  wages;  and  that  part  which  constitutes  the 
return  for  the  use  of  capital  is  called  interest.  These 
terms  mutually  exclude  each  other.  The  income  of  any 
individual  may  be  made  up  from  any  one,  two,  or  all 
three  of  these  sources;  but  in  the  effort  to  discover  the 
laws  of  distribution  we  must  keep  them  separate. 

Let  me  premise  the  inquiry  which  we  are  about  to  un- 
dertake by  saying  that  the  miscarriage  of  political  econ- 
omy, which  I  think  has  now  been  abundantly  shown,  can, 
it  seems  to  me,  be  traced  to  the  adoption  of  an  erroneous 
standpoint.  Living  and  making  their  observations  in  a 
state  of  society  in  which  a  capitalist  generally  rents  land 
and  hires  labor,  and  thus  seems  to  be  the  undertaker  or 
first  mover  in  production,  the  great  cultivators  of  the 
science  have  been  led  to  look  upon  capital  as  the  prime 
factor  in  production,  land  as  its  instrument,  and  labor 
as  its  agent  or  tool.  This  is  apparent  on  every  page — in 
the  form  and  course  of  their  reasoning,  in  the  character 
of  their  illustrations,  and  even  in  their  choice  of  terms. 
Everywhere  capital  is  the  starting  point,  the  capitalist 
the  central  figure.  So  far  does  this  go  that  both  Smith 
and  Ricardo  use  the  term  ''natural  wages"  to  express  the 
minimum  upon  which  laborers  can  live;  whereas,  unless 
injustice  is  natural,  all  that  the  laborer  produces  should 


Chap.  I.  THEIR   NECESSARY   RELATION".  163 

rather  be  held  as  his  natural  wages.  This  habit  of  look- 
ing upon  capital  as  the  employer  of  labor  has  led  both  to 
the  theory  that  wages  depend  upon  the  relative  abun- 
dance of  capital,  and  to  the  theory  that  interest  varies 
inversely  with  wages,  while  it  has  led  away  from  truths 
that  but  for  this  habit  would  have  been  apparent.  In 
short,  the  misstep  which,  so  far  as  the  great  laws  of  dis- 
tribution are  concerned,  has  led  political  economy  into 
the  jungles,  instead  of  upon  the  mountain  tops,  was 
taken  when  Adam  Smith,  in  his  first  book,  left  the 
standpoint  indicated  in  the  sentence,  "The  produce  of 
labor  constitutes  the  natural  recompense  or  wages  of 
labor,"  to  take  that  in  which  capital  is  considered  as 
employing  labor  and  paying  wages. 

But  when  we  consider  the  origin  and  natural  sequence 
of  things,  this  order  is  reversed;  and  capital  instead  of 
first  is  last;  instead  of  being  the  employer  of  labor,  it  is 
in  reality  employed  by  labor.  There  must  be  land  be- 
fore labor  can  be  exerted,  and  labor  must  be  exerted 
before  capital  can  be  produced.  Capital  is  a  result  of 
labor,  and  is  used  by  labor  to  assist  it  in  further  produc- 
tion. Labor  is  the  active  and  initial  force,  and  labor  is 
therefore  the  employer  of  capital.  Labor  can  be  exerted 
only  upon  land,  and  it  is  from  land  that  the  matter 
which  it  transmutes  into  wealth  must  be  drawn.  Land 
therefore  is  the  condition  precedent,  the  field  and  ma- 
terial of  labor.  The  natural  order  is  land,  labor,  capital; 
and,  instead  of  starting  from  capital  as  our  initial  point, 
we  should  start  from  land. 

There  is  another  thing  to  be  observed.  Capital  is  not 
a  necessary  factor  in  production.  Labor  exerted  upon 
land  can  produce  wealth  without  the  aid  of  capital,  and 
in  the  necessary  genesis  of  things  must  so  produce 
wealth  before  capital  can  exist.  Therefore  the  law  of 
rent  and  the  law  of  wages  must  correlate  each  other  and 
form  a  perfect  whole  without  reference  to  the  law  of 


164  THE   LAWS  OF   DISTRIBUTION.  Book  III. 

capital,  as  otherwise  these  laws  would  not  fit  the  cases 
which  can  readily  be  imagined,  and  which  to  some  degree 
actually  exist,  in  which  capital  takes  no  part  in  produc- 
tion. And  as  capital  is,  as  is  often  said,  but  stored-up 
labor,  it  is  but  a  form  of  labor,  a  subdivision  of  the  gen- 
eral term  labor;  and  its  law  must  be  subordinate  to,  and 
independently  correlate  with,  the  law  of  wages,  so  as  to 
fit  cases  in  which  the  whole  produce  is  divided  between 
labor  and  capital,  without  any  deduction  for  rent.  To 
resort  to  the  illustration  before  used:  The  division  of  the 
produce  between  land,  labor  and  capital  must  be  as  it 
would  be  between  Tom,  Dick,  and  Harry,  if  Tom  and 
Dick  were  the  original  partners,  and  Harry  came  in  but 
as  an  assistant  to  and  sharer  with  Dick. 


CHAPTER  II. 

RENT  AND  THE   LAW  OF  RENT. 

The  term  rent,  in  its  economic  sense — that  is,  when 
used,  as  I  am  using  it,  to  distinguish  that  part  of  the 
produce  which  accrues  to  the  owners  of  land  or  other 
natural  cajDabilities  by  virtue  of  their  ovvnership — differs 
in  meaning  from  the  word  rent  as  commonly  used.  In 
some  respects  this  economic  meaning  is  narrower  than 
the  common  meaning;  in  other  respects  it  is  wider. 

It  is  narrower  in  this:  In  common  speech,  we  apply 
the  word  rent  to  payments  for  the  use  of  buildings,  ma- 
chinery, fixtures,  etc.,  as  well  as  to  payments  for  the  use 
of  land  or  other  natural  capabilities;  and  in  speaking  of 
the  rent  of  a  house  or  the  rent  of  a  farm,  we  do  not 
separate  the  price  for  the  use  of  the  improvements  from 
the  price  for  the  use  of  the  bare  land.  But  in  the  eco- 
nomic meaning  of  rent,  payments  for  the  use  of  any  of  the 
products  of  human  exertion  are  excluded,  and  of  the 
lumped  payments  for  the  use  of  houses,  farms,  etc.,  only 
that  part  is  rent  which  constitutes  the  consideration  for 
the  use  of  the  laud — that  part  paid  for  the  use  of  build- 
ings or  other  improvements  being  properly  interest,  as  it 
is  a  consideration  for  the  use  of  capital. 

It  is  wider  in  this:  In  common  speech  we  speak  of  rent 
only  when  owner  and  user  are  distinct  persons.  But  in 
the  economic  sense  there  is  also  rent  where  the  same  per- 
son is  both  owner  and  user.  Where  owner  and  user  are 
thus  the  same  person,  whatever  part  of  his  income  he 
might  obtain  by  letting  the  land  to  another  is  rent,  while 
the  return  for  his  labor  and  capital  are  that  part  of  his 


166  THE   LAWS   OF   DISTRIBUTION.  Book  lU. 

income  which  they  would  yield  him  did  he  hire  instead 
of  owning  the  laud.  Rent  is  also  expressed  in  a  selling 
price.  When  laud  is  purchased,  the  payment  which  is 
made  for  the  ownership,  or  right  to  perpetual  use,  is  rent 
commuted  or  capitalized.  If  I  buy  land  for  a  small  price 
and  hold  it  until  I  can  sell  it  for  a  large  price,  I  have 
become  rich,  not  by  wages  for  my  labor  or  by  interest 
upon  my  capital,  but  by  the  increase  of  rent.  Eent,  in 
short,  is  the  share  in  the  wealth  produced  which  the  ex- 
clusive right  to  the  use  of  natural  capabilities  gives  to 
the  owner.  Wherever  land  has  an  exchange  value  there 
is  rent  in  the  economic  meaning  of  the  term.  Wherever 
land  having  a  value  is  used,  either  by  owner  or  hirer, 
there  is  rent  actual;  wherever  it  is  not  used,  but  still  has 
a  value,  there  is  rent  potential.  It  is  this  capacity  of 
yielding  rent  which  gives  value  to  land.  Until  its  own- 
ership will  confer  some  advantage,  land  has  no  value.* 

Thus  rent  or  land  value  does  not  arise  from  the  pro- 
ductiveness or  utility  of  land.  It  in  no  wise  represents 
any  help  or  advantage  given  to  production,  but  simply 
the  power  of  securing  apart  of  the  results  of  production. 
No  matter  what  are  its  capabilities,  land  can  yield  no 
rent  and  have  no  value  until  some  one  is  willing  to  give 
labor  or  the  results  of  labor  for  the  privilege  of  using  it; 
and  what  any  one  will  thus  give  depends  not  upon  the 
capacity  of  the  land,  but  upon  its  capacity  as  compared 
with  that  of  land  that  can  be  had  for  nothing.  I  may 
have  very  rich  land,  but  it  will  yield  no  vent  and  have  no 
value  so  long  as  there  is  other  land  as  good  to  be  had 
without  cost.  But  when  this  other  land  is  appropriated, 
and  the  best  land  to  be  had  for  nothing  is  inferior,  either 
in  fertility,  situation,  or  other  quality,  my  land  will  begin 

*  In  speaking  of  the  value  of  land  I  use  and  shall  use  the  words 
as  referring  to  the  value  of  the  bare  land.  When  I  wish  to  speak  of 
the  value  of  land  and  improvements  I  shall  use  those  words. 


Chap.n.  RENT   AND   THE   LAW    OF   HEXT.  167 

to  have  a  value  and  yield  rent.  And  though  the  pro- 
ductiveness of  my  land  may  decrease,  yet  if  the  produc- 
tiveness of  tlie  land  to  be  had  without  charge  decreases 
in  greater  proportion,  the  rent  I  can  get,  and  conse- 
quently the  value  of  my  land,  will  steadily  increase. 
Rent,  in  short,  is  the  price  of  monopoly,  arising  from  the 
reduction  to  individual  ownership  of  natural  elements 
which  human  exertion  can  neither  produce  nor  increase. 
If  one  man  owned  all  the  land  accessible  to  any  com- 
munity, he  could,  of  course,  demand  any  price  or  condi- 
tion for  its  use  that  he  saw  fit;  and,  as  long  as  his  owner- 
ship was  acknowledged,  the  other  members  of  the  com- 
munity would  have  but  death  or  emigration  as  the  alter- 
native to  submission  to  his  terms.  This  has  been  the 
case  in  many  communities;  but  in  the  modern  form  of 
society,  the  land,  though  generally  reduced  to  individ- 
ual ownership,  is  in  the  hands  of  too  many  different  per- 
sons to  permit  the  price  which  can  be  obtained  for  its 
use  to  be  fixed  by  mere  caprice  or  desire.  While  each 
individual  owner  tries  to  get  all  he  can,  there  is  a  limit 
to  what  he  can  get,  which  constitutes  the  market  price 
or  market  rent  of  the  land,  and  which  varies  with  differ- 
ent lands  and  at  different  times.  The  law,  or  relation, 
which,  under  these  circumstances  of  free  competition 
among  all  parties,  the  condition  which  in  tracing  out  the 
principles  of  political  economy  is  always  to  be  assumed, 
determines  what  rent  or  price  can  be  got  by  the  owner, 
is  styled  the  law  of  rent.  This  fixed  with  certainty,  wo 
have  more  than  a  starting  point  from  which  the  laws 
which  regulate  wages  and  interest  may  be  traced.  For, 
as  the  distribution  of  wealth  is  a  division,  in  ascertaining 
Avhat  fixes  the  share  of  the  produce  which  goes  as  rent, 
we  also  ascertain  what  fixes  the  share  which  is  left  for 
wages,  where  there  is  no  co-operation  of  capital;  and  what 
fixes  the  joint  share  left  for  wages  and  interest,  where 
capital  does  co-operate  in  production. 


168  THE   LAWS   OF   DISTRIBUTION".  Book  III. 

Fortunately,  as  to  the  law  of  rent  there  is  no  necessity 
for  discussion.  Authority  here  coincides  with  common 
sense,*  and  the  accepted  dictum  of  the  current  political 
economy  has  the  self-evident  character  of  a  geometric 
axiom.  This  accepted  law  of  rent,  which  John  Stuart 
Mill  denominates  the  J9071S  asitiorumoi  political  economy, 
is  sometimes  styled  "Eicardo's  law  of  rent,"  from  the 
fact  that,  although  not  the  first  to  announce  it,  he  first 
brought  it  prominently  into  notice. f     It  is: 

The  rent  of  land  is  dete7'mined  hy  the  excess  of  its 
produce  over  tliat  wliicli  the  same  application  can  secure 
from  the  least  productive  land  in  use. 

This  law,  which  of  course  applies  to  land  used  for 
other  purposes  than  agriculture,  and  to  all  natural 
agencies,  such  as  mines,  fisheries,  etc.,  has  been  exhaust- 
ively explained  and  illustrated  by  all  the  leading  econo- 
mists since  Eicardo.  But  its  mere  statement  has  all  the 
force  of  a  self-evident  proposition,  for  it  is  clear  that  the 
effect  of  competition  is  to  make  the  lowest  reward  for 
which  labor  and  capital  will  engage  in  production,  the 
highest  that  they  can  claim;  and  hence  to  enable  the 
owner  of  more  productive  land  to  appropriate  in  rent  all 

*  I  do  not  mean  to  say  that  the  accepted  law  of  rent  has  never 
been  disputed.  In  all  the  nonsense  that  in  the  present  disjointed 
condition  of  the  science  has  been  printed  as  political  economy,  it 
would  be  hard  to  find  anything  that  has  not  been  disputed.  But  I 
mean  to  say  that  it  has  the  sanction  of  all  economic  writers  who  are 
really  to  be  regarded  as  authority.  As  John  Stuart  Mill  says  (Book 
II.,  Chap.  XVI.),  "there  are  few  persons  who  have  refused  their 
assent  to  it,  except  from  not  having  thoroughly  understood  it.  The 
loose  and  inaccurate  way  in  which  it  is  often  apprehended  by  those 
who  affect  to  refute  it  is  very  remarkable."  An  observation  which 
has  received  many  later  exemplifications. 

f  According  to  McCulloch  the  law  of  rent  was  first  stated  in  a 
pamphlet  by  Dr.  James  Anderson  of  Edinburgh  in  1777,  and  simul- 
taneously in  the  beginning  of  this  century  by  Sir  Edward  West,  Mr. 
Malthus,  and  Mr.  Ricardo. 


Chap.n.  RENT  AND  THE  LAW  OF  RENT.  169 

the  return  above  that  required  to  recompense  labor  and 
capital  at  the  ordinary  rate — that  is  to  say,  what  they  can 
obtain  upon  the  least  productive  land  in  use,  or  at  the 
least  productive  point,  where,  of  course,  no  rent  is  paid. 

Perhaps  it  may  conduce  to  a  fuller  understanding  of 
the  law  of  rent  to  put  it  in  this  form:  The  ownership  of 
a  natural  agent  of  production  will  give  the  power  of  ap- 
propriating so  much  of  the  wealth  produced  by  the  exer- 
tion of  labor  and  capital  upon  it  as  exceeds  the  return 
which  the  same  application  of  labor  and  capital  could 
secure  in  the  least  productive  occupation  in  which  they 
freely  engage. 

This,  however,  amounts  to  precisely  the  same  thing, 
for  there  is  no  occupation  in  which  labor  and  capital  can 
engage  which  does  not  require  the  use  of  land;  and,  fur- 
thermore, the  cultivation  or  other  use  of  land  will  always 
be  carried  to  as  low  a  point  of  remuneration,  all  things 
considered,  as  is  freely  accepted  in  any  other  pursuit. 
Suppose,  for  instance,  a  community  in  which  part  of  the 
labor  and  capital  is  devoted  to  agriculture  and  part  to 
manufactures.  The  poorest  land  cultivated  yields  an 
average  return  which  we  will  call  20,  and  20  there- 
fore will  be  the  average  return  to  labor  and  capital,  as 
well  in  manufactures  as  in  agriculture.  Suppose  that 
from  some  permanent  cause  the  return  in  manufactures 
is  now  reduced  to  15.  Clearly,  the  labor  and  capital 
engaged  in  manufactures  will  turn  to  agriculture;  and 
the  process  will  not  stop  until,  either  by  the  extension  of 
cultivation  to  inferior  lands  or  to  inferior  points  on  the 
same  land,  or  by  an  increase  in  the  relative  value  of  man- 
ufactured products,  owing  to  the  diminution  of  produc- 
tion—or, as  a  matter  of  fact,  by  both  processes— the  yield 
to  labor  and  capital  in  both  pursuits  has,  all  things  con- 
sidered, been  brought  again  to  the  same  level,  so  that 
whatever  be  the  final  point  of  productiveness  at  which 
manufactures  are   still    carried    on,   whether   it   be    18 


170  THE   LAWS   OF   DISTRIBUTIOIS".  Book  III. 

or  17  or  16,  cultivation  will  also  be  extended  to  that 
point.  And,  thus,  to  say  that  rent  will  be  the  excess 
in  productiveness  over  the  yield  at  the  margin,  or 
lowest  point,  of  cultivation,  is  the  same  thing  as  to  say 
that  it  will  be  the  excess  of  produce  over  what  the  same 
amount  of  labor  and  capital  obtains  in  the  least  remuner- 
ative occupation. 

The  law  of  rent  is,  in  fact,  but  a  deduction  from  the 
law  of  competition,  and  amounts  simply  to  the  assertion 
that  as  wages  and  interest  tend  to  a  common  level,  all 
that  part  of  the  general  production  of  wealth  which  ex- 
ceeds what  the  labor  and  capital  employed  could  have 
secured  for  themselves,  if  applied  to  the  poorest  natural 
agent  in  use,  will  go  to  land  owners  in  the  shape  of  rent. 
It  rests,  in  the  last  analysis,  upon  the  fundamental  prin- 
ciple, which  is  to  political  economy  what  the  attraction 
of  gravitation  is  to  physics — that  men  will  seek  to  gratify 
their  desires  with  the  least  exertion. 

This,  then,  is  the  law  of  rent.  Although  many  stand- 
ard treatises  follow  too  much  the  example  of  Eicardo, 
who  seems  to  view  it  merely  in  its  relation  to  agriculture, 
and  in  several  places  speaks  of  manufactures  yielding  no 
rent,  when,  in  truth,  manufactures  and  exchange  yield 
the  highest  rents,  as  is  evinced  by  the  greater  value  of 
land  in  manufacturing  and  commercial  cities,  thus  hid- 
ing the  full  importance  of  the  law,  yet,  ever  since  the 
time  of  Eicardo,  the  law  itself  has  been  clearly  appre- 
hended and  fully  recognized.  But  not  so  its  corollaries. 
Plain  as  they  are,  the  accepted  doctrine  of  wages  (backed 
and  fortified  not  only  as  has  been  hitherto  explained, 
but  by  considerations  whose  enormous  weight  will  be  seen 
when  the  logical  conclusion  toward  which  we  are  tending 
is  reached)  has   hitherto   prevented  their  recognition.* 

*  Buckle  (Chap.  II.,  History  of  Civilization)  recognizes  the  neces- 
sary relation  between  rent,  interest,  and  wages,  but  evidently  never 
worked  it  out. 


Chap.  II.  RENT  AND  THE   LAW   OF  RENT.  171 

Yet,  is  it  not  as  plain  as  the  simplest  geometrical  demon- 
stration, that  the  corollary  of  the  law  of  rent  is  the  law 
of  wages,  where  the  division  of  the  produce  is  simply  be- 
tween rent  and  wages;  or  the  law  of  wages  and  interest 
taken  together,  where  the  division  is  into  rent,  wages, 
and  interest?  Stated  reversely,  the  law  of  rent  is  neces- 
sarily the  law  of  wages  and  interest  taken  together,  for 
it  is  the  assertion,  that  no  matter  what  be  the  production 
which  results  from  the  application  of  labor  and  capital, 
these  two  factors  will  receive  in  wages  and  interest  only 
such  part  of  the  produce  as  they  could  have  produced  on 
land  free  to  them  without  the  payment  of  rent — that  is, 
the  least  productive  land  or  point  in  use.  For,  if,  of  the 
produce,  all  over  the  amount  which  labor  and  capital 
could  secure  from  land  for  which  no  rent  is  paid  must  go 
to  land  owners  as  rent,  then  all  that  can  be  claimed  by 
labor  and  capital  as  wages  and  interest  is  the  amount 
which  they  could  have  secured  from  land  yielding  no  rent. 

Or  to  put  it  in  algebraic  form: 

As  Produce  =  Kent+Wages-|- Interest, 

Therefore,  Produce — Eent=:Wages+Interest. 

Thus  wages  and  interest  do  not  depend  upon  the  prod- 
uce of  labor  and  capital,  but  upon  what  is  left  after 
rent  is  taken  out;  or,  upon  the  produce  which  they  could 
obtain  without  paying  rent — that  is,  from  the  poorest 
land  in  use.  And  hence,  no  matter  what  be  the  increase 
in  productive  power,  if  the  increase  in  rent  keeps  pace 
with  it,  neither  wages  nor  interest  can  increase. 

The  moment  this  simple  relation  is  recognized,  a  flood 
of  light  streams  in  upon  what  was  before  inexplicable, 
and  seemingly  discordant  facts  range  themselves  under 
an  obvious  law.  The  increase  of  rent  which  goes  on  in 
progressive  countries  is  at  once  seen  to  be  the  key  which 
explains  why  wages  and  interest  fail  to  increase  with  in- 
crease of  productive  power.  For  the  wealth  produced 
in  every  community  is  divided  into  two  parts  by  what 


172  THE   LAWS  OF   DISTRIBUTION.  Book  III. 

may  be  called  the  rent  line;,  which  is  fixed  by  the  margin 
of  cultivation,  or  the  return  which  labor  and  capital  could 
obtain  from  such  natural  opportunities  as  are  free  to 
them  without  the  payment  of  rent.  From  the  part  of 
the  produce  below  this  line  wages  and  interest  must  be 
paid.  All  that  is  above  goes  to  the  owners  of  land. 
Thus,  where  the  value  of  land  is  low,  there  may  be  a 
small  production  of  wealth,  and  yet  a  high  rate  of  wages 
and  interest,  as  we  see  in  new  countries.  And,  where  the 
value  of  land  is  high,  there  may  be  a  very  large  produc- 
tion of  wealth,  and  yet  a  low  rate  of  wages  and  interest, 
as  we  see  in  old  countries.  And,  where  productive  power 
increases,  as  it  is  increasing  in  all  progressive  countries, 
wages  and  interest  will  be  affected,  not  by  the  increase, 
but  by  the  manner  in  which  rent  is  affected.  If  the 
value  of  land  increases  proportionately,  all  the  increased 
production  will  be  swallowed  up  by  rent,  and  wages  and 
interest  will  remain  as  before.  If  the  value  of  land  in- 
creases in  greater  ratio  than  productive  power,  rent  will 
swallow  up  even  more  than  the  increase;  and  while  the 
produce  of  labor  and  capital  will  be  much  larger,  wages 
and  interest  will  fall.  It  is  only  when  the  value  of  land 
fails  to  increase  as  rapidly  as  productive  power,  that  wages 
and  interest  can  increase  with  the  increase  of  productive 
power.     All  this  is  exemplified  in  actual  fact. 


CHAPTER  III. 

OF  INTEREST  AND   THE   CAUSE  OF  INTEREST. 

Having  made  sure  of  the  law  of  rent,  we  have  ob- 
tained as  its  necessary  corollary  the  law  of  wages,  where 
the  division  is  between  rent  and  wages;  and  the  law  of 
wages  and  interest  taken  together,  where  the  division  is 
between  the  three  factors.  What  proportion  of  the  prod- 
uce is  taken  as  rent  must  determine  what  proportion  is 
left  for  wages,  if  but  land  and  labor  are  concerned;  or  to 
be  divided  between  wages  and  interest,  if  capital  joins  in 
the  production. 

But  without  reference  to  this  deduction,  let  us  seek 
each  of  these  laws  separately  and  independently.  If, 
when  obtained  in  this  way,  we  find  that  they  correlate, 
our  conclusions  will  have  the  highest  certainty. 

And,  inasmuch  as  the  discovery  of  the  law  of  wages  is 
the  ultimate  purpose  of  our  inquiry,  let  us  take  up  first 
the  subject  of  interest. 

I  have  already  referred  to  the  difEerence  in  meaning 
between  the  terms  profits  and  interest.  It  may  be  worth 
while,  further,  to  say  that  interest,  as  an  abstract  term  in 
the  distribution  of  wealth,  differs  in  meaning  from  the 
word  as  commonly  used,  in  this:  That  it  includes  all  re- 
turns for  the  use  of  capital,  and  not  merely  those  that 
pass  from  borrower  to  lender;  and  that  it  excludes  com- 
pensation for  risk,  which  forms  so  great  a  part  of  what  is 
commonly  called  interest.  Compensation  for  risk  is  evi- 
dently only  an  equalization  of  return  between  different 
employments  of  capital.  What  we  want  to  find  is,  what 
fixes  the  general  rate  of  interest  proper?    The  different 


174  THE   LAWS   OF   DISTRIBUTION.  Book  III. 

rates  of  compeDsation  for  risk  added  to  this  will  give  the 
current  rates  of  commercial  interest. 

Now,  it  is  evident  that  the  greatest  differences  in  what 
is  ordinarily  called  interest  are  due  to  differences  in  risk; 
but  it  is  also  evident  that  between  different  countries  and 
different  times  there  are  also  considerable  variations  in 
the  rate  of  interest  proper.  In  California  at  one  time 
two  per  cent,  a  month  would  not  have  been  considered 
extravagant  interest  on  security  on  which  loans  could 
now  be  effected  at  seven  or  eight  per  cent,  per  annum, 
and  though  some  part  of  the  difference  may  be  due  to  an 
increased  sense  of  general  stability,  the  greater  part  is 
evidently  due  to  some  other  general  cause.  In  the 
United  States  generally  the  rate  of  interest  has  been 
higher  than  in  England;  and  in  the  newer  States  of  the 
Union  higher  than  in  the  older  States;  and  the  tendency 
of  interest  to  sink  as  society  progresses  is  well  marked 
and  has  long  been  noticed.  What  is  the  law  which  will 
bind  all  these  variations  together  and  exhibit  their  cause? 

It  is  not  worth  while  to  dwell  more  than  has  hitherto 
incidentally  been  done  upon  the  failure  of  the  current 
political  economy  to  determine  the  true  law  of  interest. 
Its  speculations  upon  this  subject  have  not  the  definite- 
ness  and  coherency  which  have  enabled  the  accepted  doc- 
trine of  wages  to  withstand  the  evidence  of  fact,  and  do 
not  require  the  same  elaborate  review.  That  they  run 
counter  to  the  facts  is  evident.  That  interest  does  not 
depend  on  the  productiveness  of  labor  and  capital  is 
proved  by  the  general  fact  that  where  labor  and  capital 
are  most  productive  interest  is  lowest.  That  it  does  not 
depend  reversely  upon  wages  (or  the  cost  of  labor),  low- 
ering as  wages  rise,  and  increasing  as  wages  fall,  is  proved 
by  the  general  fact  that  interest  is  high  when  and  where 
wages  are  high,  and  low  when  and  where  wages  are  low. 

Let  us  begin  at  the  beginning.  The  nature  and  func- 
tions of  capital  have  already  been  sufiBciently  shown,  but 


Chap.  HI.      INTEREST   AND   THE   CAUSE   OF    INTEREST.  175 

even  at  the  risk  of  something  like  a  digression,  let  ua 
endeavor  to  ascertain  the  cause  of  interest  before  consid- 
ering its  law.  For  in  addition  to  aiding  our  inquiry  by 
giving  us  a  firmer  and  clearer  grasp  of  the  subject  now 
in  hand,  it  may  lead  to  conclusions  whose  practical  im- 
portance will  be  hereafter  apparent. 

What  is  the  reason  and  justification  of  interest?  Why 
should  the  borrower  pay  back  to  the  lender  more  than 
he  received?  These  questions  are  worth  answering,  not 
merely  from  their  speculative,  but  from  their  practical 
importance.  The  feeling  that  interest  is  the  robbery  of 
industry  is  widespread  and  growing,  and  on  both  sides  of 
the  Atlantic  shows  itself  more  and  more  in  popular  liter- 
ature and  in  popular  movements.  The  expounders  of 
the  current  political  economy  say  that  there  is  no  conflict 
between  labor  and  capital,  and  oppose  as  injurious  to 
labor,  as  well  as  to  capital,  all  schemes  for  restricting  the 
reward  which  capital  obtains;  yet  in  the  same  works  the 
doctrine  is  laid  down  that  wages  and  interest  bear  to  each 
other  an  inverse  relation,  and  that  interest  will  be  low  or 
high  as  wages  are  high  or  low.*  Clearly,  then,  if  this 
doctrine  is  correct,  the  only  objection  that  from  the 
standpoint  of  the  laborer  can  be  logically  made  to  any 
scheme  for  the  reduction  of  interest  is  that  it  will  not 
work,  which  is  manifestly  very  weak  ground  while  ideas 
of  the  omnipotence  of  legislatures  are  yet  so  widespread; 
and  though  such  an  objection  may  lead  to  the  abandon- 
ment of  any  one  particular  scheme,  it  will  not  prevent 
the  search  for  another. 

Why  should  interest  be?  Interest,  we  are  told,  in  all 
the  standard  works,  is  the  reward  of  abstinence.  But, 
manifestly,  this  does  not  sufficiently  account  for  it.  Ab- 
stinence is  not  an  active,  but  a  passive  quality;  it  is  not  a 

*  This  is  really  said  of  profits,  but  with  the  evident  meaning  of 
returns  to  capital. 


176  THE   LAWS   OF   DISTRIBUTION.  Book  III. 

doing — it  is  simply  a  not  doing.  Abstinence  in  itself 
produces  nothing.  Why,  then,  should  any  part  of  what 
is  produced  be  claimed  for  it?  If  I  have  a  sum  of  money 
which  I  lock  up  for  a  year,  I  have  exercised  as  much  ab- 
stinence as  though  I  had  loaned  it.  Yet,  though  in  the 
latter  case  I  will  expect  it  to  be  returned  to  me  with  an 
additional  sum  by  way  of  interest,  in  the  former  I  will 
have  but  the  same  sum,  and  no  increase.  But  the  ab- 
stinence is  the  same.  If  it  be  said  that  in  lending  it  I 
do  the  borrower  a  service,  it  may  be  replied  that  he  also 
does  me  a  service  in  keeping  it  safely — a  service  that 
under  some  conditions  may  be  very  valuable,  and  for 
which  I  would  willingly  pay,  rather  than  not  have  it; 
and  a  service  which,  as  to  some  forms  of  capital,  may  be 
even  more  obvious  than  as  to  money.  For  there  are 
many  forms  of  capital  which  will  not  keep,  but  must  be 
constantly  renewed;  and  many  which  are  onerous  to 
maintain  if  one  has  no  immediate  use  for  them.  So,  if 
the  accumulator  of  capital  helps  the  user  of  capital  by 
loaning  it  to  him,  does  not  the  user  discharge  the  debt 
in  full  when  he  hands  it  back?  Is  not  the  secure  preser- 
vation, the  maintenance,  the  re-creation  of  capital,  a 
complete  offset  to  the  use?  Accumulation  is  the  end 
and  aim  of  abstinence'.  Abstinence  can  go  no  further 
and  accomplish  no  more;  nor  of  itself  can  it  even  do 
this.  If  we  were  merely  to  abstain  from  using  it,  how 
much  wealth  would  disappear  in  a  year!  And  how  little 
would  be  left  at  the  end  of  two  years!  Hence,  if  more  is 
demanded  for  abstinence  than  the  safe  return  of  capital, 
is  not  labor  wronged?  Such  ideas  as  these  underlie  the 
widespread  opinion  that  interest  can  accrue  only  at  the 
expense  of  labor,  and  is  in  fact  a  robbery  of  labor  which 
in  a  social  condition  based  on  justice  would  be  abolished. 
The  attempts  to  refute  these  views  do  not  appear  to  me 
always  successful.  For  instance,  as  it  illustrates  the 
usual  reasoning,  take  Bastiat's  oft-quoted  illustration  of 


ClMp.ni.      INTEEEST   AND   THE   CAUSE   OF   INTEREST.  177 

the  plane.  One  carpenter,  James,  at  the  expense  of 
ten  days'  labor,  makes  himself  a  plane,  whicli  will  last 
in  use  for  290  of  the  300  working  days  of  the  year. 
William,  another  carpenter,  proposes  to  borrow  the 
plane  for  a  year,  offering  to  give  back  at  the  end  of 
that  time,  when  the  plane  will  be  worn  out,  a  new 
plane  equally  as  good.  James  objects  to  lending  the 
plane  on  these  terms,  urging  that  if  he  merely  gets  back 
a  plane  he  will  have  nothing  to  compensate  him  for  the 
loss  of  the  advantage  which  the  use  of  the  plane  during 
the  year  would  give  him.  William,  admitting  this, 
agrees  not  merely  to  return  a  plane,  but,  in  addition,  to 
give  James  a  new  plank.  The  agreement  is  carried  out 
to  mutual  satisfaction.  The  plane  is  used  up  during  the 
year,  but  at  the  end  of  the  year  James  receives  as  good 
a  one,  and  a  plank  in  addition.  He  lends  the  new  plane 
again  and  again,  until  finally  it  passes  into  the  hands  of 
his  son,  "who  still  continues  to  lend  it,"  receiving  a 
plank  each  time.  This  plank,  which  represents  interest, 
is  said  to  be  a  natural  and  equitable  remuneration,  as  by 
giving  it  in  return  for  the  use  of  the  plane,  William 
"obtains  the  power  which  exists  in  the  tool  to  increase 
the  productiveness  of  labor,"  and  is  no  worse  off  than  he 
would  have  been  had  he  not  borrowed  the  plane;  while 
James  obtains  no  more  than  he  would  have  had  if  he  had 
retained  and  used  the  plane  instead  of  lending  it. 

Is  this  really  so?  It  will  be  observed  that  it  is  not 
affirmed  that  James  could  make  the  plane  and  William 
could  not,  for  that  would  be  to  make  the  plank  the  re- 
ward of  superior  skill.  It  is  only  that  James  had  ab- 
stained from  consuming  the  result  of  his  labor  until  he 
had  accumulated  it  in  the  form  of  a  plane — which  is  the 
essential  idea  of  capital. 

Now,  if  James  had  not  lent  the  plane  he  could  have 
used  it  for  290  days,  when  it  would  have  been  worn  out, 
and  he  would  have  been  obliged  to  take  the  remaining 


178  THE   LAWS  OF  DISTRIBUTION.  Book  III. 

ten  days  of  the  working  year  to  make  a  new  plane.  If 
William  had  not  borrowed  the  plane  he  would  have  taken 
ten  days  to  make  himself  a  plane,  which  he  could  have 
used  for  the  remaining  290  days.  Thus,  if  we  take  a 
plank  to  represent  the  fruits  of  a  day's  labor  with  the 
aid  of  a  plane,  at  the  end  of  the  year,  had  no  borrowing 
taken  place,  each  would  have  stood  with  reference  to  the 
plane  as  he  commenced,  James  with  a  plane,  and  William 
with  none,  and  each  would  have  had  as  the  result  of  the 
year's  work  290  planks.  If  the  condition  of  the  borroAV- 
ing  had  been  what  William  first  proposed,  the  return  of 
a  new  plane,  the  same  relative  situation  would  have  been 
secured.  William  would  have  worked  for  290  days,  and 
taken  the  last  ten  days  to  make  the  new  plane  to  return 
to  James.  James  would  have  taken  the  first  ten  days  of 
the  year  to  make  another  plane  which  would  have  lasted 
for  290  days,  when  he  would  have  received  a  new  plane 
from  William.  Thus,  the  simple  return  of  the  plane 
would  have  put  each  in  the  same  position  at  the  end  of 
the  year  as  if  no  borrowing  had  taken  place.  James 
would  have  lost  nothing  to  the  gain  of  William,  and  Will- 
iam would  have  gained  nothing  to  the  loss  of  James. 
Each  would  have  had  the  return  his  labor  would  other- 
wise have  yielded — viz.,  290  planks,  and  James  would 
have  had  the  advantage  with  which  he  started,  a  new 
plane. 

But  when,  in  addition  to  the  return  of  a  plane,  a 
plank  is  given,  James  at  the  end  of  the  year  will  be  in  a 
better  position  than  if  there  had  been  no  borrowing,  and 
William  in  a  worse.  James  will  have  291  planks  and  a 
new  plane,  and  William  289  planks  and  no  plane.  If 
William  now  borrows  the  plank  as  well  as  the  plane  on  the 
same  terms  as  before,  he  will  at  the  end  of  the  year  have 
to  return  to  James  a  plane,  two  planks  and  a  fraction 
of  a  plank;  and  if  this  difference  be  again  borrowed,  and 
so  on,  is  it  not  evident  that  the  income  of  the  one  will 


Chap.  III.     INTEKEST   AND   THE   CAUSE   OF   TXTEREST.  179 

progressively  decline,  and  that  of  the  other  will  progress- 
ively increase,  until  at  length,  if  the  operation  be  con- 
tinued, the  time  will  come  when,  as  the  result  of  the 
original  lending  of  a  plane,  James  will  obtain  the  whole 
result  of  William's  labor — that  is  to  say,  William  will  be- 
come virtually  his  slave? 

Is  interest,  then,  natural  and  equitable?  There  is 
nothing  in  this  illustration  to  show  it  to  be.  Evidently 
what  Bastiat  (and  many  others)  assigns  as  the  basis  of 
interest,  "the  power  which  exists  in  the  tool  to  increase 
the  productiveness  of  labor,"  is  neither  in  justice  nor  in 
fact  the  basis  of  interest.  The  fallacy  which  makes 
Bastiat's  illustration  pass  as  conclusive  Avith  those  who 
do  not  stop  to  analyze  it,  as  we  have  done,  is  that  with 
the  loan  of  the  plane  they  associate  the  transfer  of  the 
increased  productive  power  which  a  plane  gives  to  labor. 
But  this  is  really  not  involved.  The  essential  thing 
which  James  loaned  to  William  was  not  the  increased 
power  which  labor  acquires  from  using  planes.  To  sup- 
pose this,  we  should  have  to  suppose  that  the  making 
and  using  of  planes  was  a  trade  secret  or  a  patent  right, 
when  the  illustration  would  become  one  of  monopoly, 
not  of  capital.  The  essential  thing  which  James  loaned 
to  William  was  not  the  privilege  of  applying  his  labor  in 
a  more  effective  way,  but  the  use  of  the  concrete  result  of 
ten  days*  labor.  If  "the  power  which  exists  in  tools  to 
increase  the  productiveness  of  labor"  were  the  cause  of 
interest,  then  the  rate  of  interest  would  increase  with 
the  march  of  invention.  This  is  not  so.  Nor  yet  will  I 
be  expected  to  pay  more  interest  if  I  borrow  a  fifty-dollar 
sewing  machine  than  if  I  borrow  fifty  dollars'  worth  of 
needles;  if  I  borrow  a  steam  engine  than  if  I  borrow  a 
pile  of  bricks  of  equal  value.  Capital,  like  wealth,  is 
interchangeable.  It  is  not  one  thing;  it  is  anything  to 
that  value  within  the  circle  of  exchange.  Nor  yet  does 
the  improvement  of  tools  add  to  the  reproductive  power 
of  capital;  it  adds  to  the  productive  power  of  labor. 


180  THE  LAWS   OF   DISTRIBUTICK.  Book  III. 

And  I  am  inclined  to  think  that  if  all  wealth  consisted 
of  such  things  as  planes,  and  all  production  was  such  as 
that  of  carpenters — that  is  to  say,  if  wealth  consisted  but 
of  the  inert  matter  of  the  universe,  and  production  of 
working  up  this  inert  matter  into  different  shapes,  that 
interest  would  be  but  the  robbery  of  industry,  and  could 
not  long  exist.  This  is  not  to  say  that  there  would  be  no 
accumulation,  for  though  the  hope  of  increase  is  a 
motive  for  turning  wealth  into  capital,  it  is  not  the 
motive,  or,  at  least,  not  the  main  motive,  for  accumulat- 
ing. Children  will  save  their  pennies  for  Christmas; 
pirates  will  add  to  their  buried  treasure;  Eastern  princes 
will  accumulate  hoards  of  coin;  and  men  like  Stewart  or 
Vauderbilt,  having  become  once  possessed  of  the  passion 
of  accumulating,  would  continue  as  long  as  they  could  to 
add  to  their  millions,  even  though  accumulation  brought 
no  increase.  Nor  yet  is  it  to  say  that  there  would  be  no 
borrowing  or  lending,  for  this,  to  a  large  extent,  would 
be  prompted  by  mutual  convenience.  If  William  had  a 
job  of  work  to  be  immediately  begun  and  James  one  that 
would  not  commence  until  ten  days  thereafter,  there 
might  be  a  mutual  advantage  in  the  loan  of  the  plane, 
though  no  plank  should  be  given. 

But  all  wealth  is  not  of  the  nature  of  planes,  or  planks, 
or  money,  which  has  no  reproductive  power;  nor  is  all 
production  merely  the  turning  into  other  forms  of  this 
inert  matter  of  the  universe.  It  is  true  that  if  I  put 
away  money,  it  will  not  increase.  But  suppose,  instead, 
I  put  away  wine.  At  the  end  of  a  year  I  will  have  an 
increased  value,  for  the  wine  will  have  improved  in 
quality.  Or  supposing  that  in  a  country  adapted  to 
them,  I  set  out  bees;  at  the  end  of  a  year  I  will  have 
more  swarms  of  bees,  and  the  honey  which  they  have 
made.  Or,  supposing,  where  there  is  a  range,  I  turn  out 
sheep,  or  hogs,  or  cattle;  at  the  end  of  the  year  I  will, 
upon  the  average,  also  have  an  increase. 


Chap.  III.     INTEREST   AND   TUE   CAUSE   OF   INTEREST.  181 

Now  what  gives  the  increase  in  these  cases  is  some- 
thing which,  though  it  generally  requires  labor  to  utilize 
it,  is  yet  distinct  and  separable  from  labor — the  active 
power  of  nature;  the  principle  of  growth,  of  reproduc- 
tion, which  everywhere  characterizes  all  the  forms  of 
that  mysterious  thing  or  condition  which  we  call  life. 
And  it  seems  to  me  that  it  is  this  which  is  the  cause  of 
interest,  or  the  increase  of  capital  over  and  above  that 
due  to  labor.  There  are,  so  to  speak,  in  the  movements 
which  make  up  the  everlasting  flux  of  nature,  certain 
vital  currents,  which  will,  if  we  use  them,  aid  us,  with  a 
force  independent  of  our  own  efforts,  in  turning  matter 
into  the  forms  we  desire — that  is  to  say,  into  wealth. 

While  many  things  might  be  mentioned  which,  like 
money,  or  planes,  or  planks,  or  engines,  or  clothing, 
have  no  innate  power  of  increase,  yet  other  things  are 
included  in  the  terms  wealth  and  capital  which,  like 
wine,  will  of  themselves  increase  in  quality  up  to  a  cer- 
tain point;  or,  like  bees  or  cattle,  will  of  themselves  in- 
crease in  quantity;  and  certain  other  things,  such  as 
seeds,  which,  though  the  conditions  which  enable  them 
to  increase  may  not  be  maintained  without  labor,  yet 
will,  when  these  conditions  are  maintained,  yield  an  in- 
crease, or  give  a  return  over  and  above  that  which  is  to 
be  attributed  to  labor. 

Now  the  interchangeability  of  wealth  necessarily  in- 
volves an  average  between  all  the  species  of  wealth  of 
any  special  advantage  Avhich  accrues  from  the  possession 
of  any  particular  species,  for  no  one  would  keep  capital 
in  one  form  when  it  could  be  changed  into  a  more  ad- 
vantageous form.  No  one,  for  instance,  would  grind 
wheat  into  flour  and  keep  it  on  hand  for  the  convenience 
of  those  who  desire  from  time  to  time  to  exchange  wheat 
or  its  equivalent  for  flour,  unless  he  could  by  such  ex- 
change secure  an  increase  equal  to  that  which,  all  things 
considered,  he  could  secure  by  planting  his  wheat.     No 


182  THE   LAWS   OF   DISTKIBUTIOK.  Book  UI. 

one,  if  he  could  keep  them,  would  exchange  a  flock  of 
sheep  now  for  their  net  weight  in  mutton  to  be  returned 
next  year;  for  by  keeping  the  sheep  he  would  not  only 
have  the  same  amount  of  mutton  next  year,  but  also  the 
lambs  and  the  fleeces.  No  one  would  dig  an  irrigating 
ditch,  unless  those  who  by  its  aid  are  enabled  to  utilize 
the  reproductive  forces  of  nature  would  give  him  such 
a  portion  of  the  increase  they  receive  as  to  make  his  cap- 
ital yield  him  as  much  as  theirs.  And  so,  in  any  cir- 
cle of  exchange,  the  power  of  increase  which  the  repro- 
ductive or  vital  force  of  nature  gives  to  some  species  of 
capital  must  average  with  all;  and  he  who  lends,  or  uses 
in  exchange,  money,  or  planes,  or  bricks,  or  clothing,  is 
not  deprived  of  the  power  to  obtain  an  increase,  any 
more  than  if  he  had  lent  or  put  to  a  reproductive  use  so 
much  capital  in  a  form  capable  of  increase. 

There  is  also  in  the  utilization  of  the  variations  in  the 
powers  of  nature  and  of  man  which  is  effected  by  ex- 
change, an  increase  which  somewhat  resembles  that  pro- 
duced by  the  vital  forces  of  nature.  In  one  place,  for 
instance,  a  given  amount  of  labor  will  secure  200  in 
vegetable  food  or  100  in  animal  food.  In  another  place, 
these  conditions  are  reversed,  and  the  same  amount  of 
labor  will  produce  100  in  vegetable  food  or  200  in  ani- 
mal. In  the  one  place,  the  relative  value  of  vegetable 
to  animal  food  will  be  as  two  to  one,  and  in  the  other  as 
one  to  two;  and,  supposing  equal  amounts  of  each  to  be  re- 
quired, the  same  amount  of  labor  will  in  either  place  secure 
150  of  both.  But  by  devoting  labor  in  the  one  place  to 
the  procurement  of  vegetable  food,  and  in  the  other,  to 
the  procurement  of  animal  food,  and  exchanging  to  the 
quantity  required,  the  people  of  each  place  will  be  en- 
abled by  the  given  amount  of  labor  to  procure  200 
of  both,  less  the  losses  and  expenses  of  exchange;  so 
that  in  each  place  the  produce  which  is  taken  from 
use  and  devoted  to  exchange  brings  back  an  increase. 


Chap.  HI.    INTEREST   AIs'D   THE   CAUSE    OF    INTEREST.  183 

Thus  Whittington's  cat,  sent  to  a  far  country  where  cats 
are  scarce  and  rats  are  plenty,  returns  in  bales  of  goods 
and  bags  of  gold. 

Of  course,  labor  is  necessary  to  exchange,  as  it  is  to 
the  utilization  of  the  reproductive  forces  of  nature,  and 
the  produce  of  exchange,  as  the  produce  of  agriculture, 
is  clearly  the  produce  of  labor;  but  yet,  in  the  one  case 
as  in  the  other,  there  is  a  distinguishable  force  co-operat- 
ing with  that  of  labor,  which  makes  it  impossible  to 
measure  the  result  solely  by  the  amount  of  labor  ex- 
pended, but  renders  the  amount  of  capital  and  the  time 
it  is  in  use  integral  parts  in  the  sum  of  forces.  Capital 
aids  labor  in  all  of  the  different  modes  of  production,  but 
there  is  a  distinction  between  the  relations  of  the  two  in 
such  modes  of  production  as  consist  merely  of  changing 
the  form  or  place  of  matter,  as  planing  boards  or  mining 
coal;  and  such  modes  of  production  as  avail  themselves 
of  the  reproductive  forces  of  nature,  or  of  the  power 
of  increase  arising  from  differences  in  the  distribu- 
tion of  natural  and  human  powers,  such  as  the  raising  of 
grain  or  the  exchange  of  ice  for  sugar.  In  production 
of  the  first  kind,  labor  alone  is  the  efficient  cause;  when 
labor  stops,  production  stops.  "When  the  carpenter 
drops  his  plane  as  the  sun  sets,  the  increase  of  value, 
which  he  with  his  plane  is  producing,  ceases  until  he  be- 
gins his  labor  again  the  following  morning.  When  the 
factory  bell  rings  for  closing,  when  the  mine  is  shut 
down,  production  ends  until  work  is  resumed.  The  in- 
tervening time,  so  far  as  regards  production,  might  as 
well  be  blotted  out.  The  lapse  of  days,  the  change  of 
seasons  is  no  element  in  the  production  that  depends 
solely  upon  the  amount  of  labor  expended.  But  in  the 
other  modes  of  production  to  which  I  have  referred,  and 
in  which  the  part  of  labor  may  be  likened  to  the  opera- 
tions of  lumbermen  who  throw  their  logs  into  the 
stream,  leaving  it  to  the  current  to  carry  them  to  the 


184  THE  LAWS   OF   DISTRIBUTION".  Book  777. 

boom  of  the  sawmill  many  miles  below,  time  is  an  ele- 
ment.    The  seed  in  the  ground  germinates  and  grows 
while  the  farmer  sleeps  or  plows  new  fields,  and  the  ever- 
flowing  currents  of  air  and  ocean  bear  Whittington's  cat 
toward  the  rat-tormented  ruler  in  the  regions  of  romance. 
To  recur  now  to  Bastiat's  illustration.     It  is  evident 
that  if  there  is  any  reason  why  William  at  the  end  of  the 
year  should  return  to  James  more  than  an  equally  good 
plane,  it  does  not  spring,  as  Bastiat  has  it,  from  the  in- 
creased power  which  the  tool  gives  to  labor,  for  that,  as  I 
have  shown,  is  not  an  element;  but  it  springs  from  the 
element  of  time — the  difference  of  a  year  between  the 
lending  and  return  of  the  plane.     Now,  if  the  view  is 
confined  to  the  illustration,  there  is  nothing  to  suggest 
how  this  element  should  operate,  for  a  plane  at  the  end 
of  the  year  has  no  greater  value  than  a  plane  at  the  be- 
ginning.    But  if  we  substitute  for  the  plane  a  calf,  it  is 
clearly  to  be  seen  that  to  put  James  in  as  good  a  position 
as  if  he  had  not  lent,  William  at  the  end  of  the  year 
must  return,  not  a  calf,  but  a  cow.     Or,  if  we  suppose 
that  the   ten  days'  labor  had  been  devoted  to  planting 
corn,  it  is  evident  that  James  would  not  have  been  fully 
recompensed  if  at  the  end  of  the  year  he  had  received 
simply  so  much  planted  corn,  for  during  the  year  the 
planted  corn  would  have  germinated  and  grown  and  mul- 
tiplied;  and  so  if    the  plane  had  been  devoted  to  ex- 
change, it  might  during  the  year  have  been  turned  over 
several   times,  each   exchange   yielding  an   increase  to 
James.     Now,   therefore,   as  James'  labor  might   have 
been  applied  in  any  of  those  ways — or  what  amounts  to 
the  same  thing,  some  of  the  labor  devoted  to  making 
planes  might  have  been   thus   transferred — he  will  not 
make  a  plane  for  William  to  use  for  the  year  unless  he 
gets  back  more  than  a  plane.     And  William  can  afford  to 
give  back  more  than  a  plane,  because  the  same  general 
average  of  the  advantages  of  labor  applied  in  different 


Chap.  III.     INTEREST  AND   THE   CAUSE   OF   INTEREST.  185 

modes  will  enable  him  to  obtain  from  his  labor  an  ad- 
vantage from  the  element  of  time.  It  is  this  general 
averaging,  or  as  we  may  say,  "pooling"  of  advantages, 
which  necessarily  takes  place  where  the  exigencies  of 
society  require  the  simultaneous  carrying  on  of  the  differ- 
ent modes  of  production,  which  gives  to  the  possession  of 
wealth  incapable  in  itself  of  increase  an  advantage  simi- 
lar to  that  which  attaches  to  wealth  used  in  such  a  way 
as  to  gain  from  the  element  of  time.  And,  in  the  last 
analysis,  the  advantage  which  is  given  by  the  lapse  of 
time  springs  from  the  generative  force  of  nature  and  the 
varying  powers  of  nature  and  of  man. 

Were  the  quality  and  capacity  of  matter  everywhere 
uniform,  and  all  productive  power  in  man,  there  would 
be  no  interest.  The  advantage  of  superior  tools  might 
at  times  be  transferred  on  terms  resembling  the  payment 
of  interest,  but  such  transactions  would  be  irregular  and 
intermittent — the  exception,  not  the  rule.  For  the  power 
of  obtaining  such  returns  would  not,  as  now,  inhere  in 
the  possession  of  capital,  and  the  advantage  of  time 
would  operate  only  in  peculiar  circumstances.  That  I, 
having  a  thousand  dollars,  can  certainly  let  it  out  at  in- 
terest, does  not  arise  from  the  fact  that  there  are  others, 
not  having  a  thousand  dollars,  who  will  gladly  pay  me 
for  the  use  of  it,  if  they  can  get  it  no  other  way;  but 
from  the  fact  that  the  capital  which  my  thousand  dollars 
represents  has  the  power  of  yielding  an  increase  to 
whomsoever  has  it,  even  though  he  be  a  millionaire. 
For  the  price  which  anything  will  bring  does  not  depend 
upon  what  the  buyer  would  be  willing  to  give  rather  than 
go  without  it,  so  much  as  upon  what  the  seller  can  other- 
wise get.  For  instance,  a  manufacturer  who  wishes  to 
retire  from  business  has  machinery  to  the  value  of  §100,- 
000.  If  he  cannot,  should  he  sell,  take  this  $100,000 
and  invest  it  so  that  it  will  yield  him  interest,  it  will 
be  immaterial  to  him,  risk  being  eliminated,  whether  he 


186  THE  LAWS  OP  DISTRIBUTION".  Book  ILL 

obtains  the  whole  price  at  once  or  in  installments,  and  if 
the  purchaser  has  the  requisite  capital,  which  we  must 
suppose  in  order  that  the  transaction  may  rest  on  its  own 
merits,  it  will  be  immaterial  whether  he  pay  at  once  or 
after  a  time.  If  the  purchaser  has  not  the  required  capital, 
it  may  be  to  his  convenience  that  payments  should  be  de- 
layed, but  it  would  be  only  in  exceptional  circumstances 
that  the  seller  would  ask,  or  the  buyer  would  consent,  to 
pay  any  premium  on  this  account;  nor  in  such  cases 
would  this  premium  be  properly  interest.  For  interest 
is  not  properly  a  payment  made  for  the  use  of  capital, 
but  a  return  accruing  from  the  increase  of  capital.  If 
the  capital  did  not  yield  an  increase,  the  cases  would  be 
few  and  exceptional  in  which  the  owner  would  get  a 
premium.  William  would  soon  find  out  if  it  did  not  pay 
him  to  give  a  plank  for  the  privilege  of  deferring  pay- 
ment on  James'  plane. 

In  short,  when  we  come  to  analyze  production  we  find 
it  to  fall  into  three  modes — viz: 

Adaptin^g,  or  changing  natural  products  either  in  form 
or  in  place  so  as  to  fit  them  for  the  satisfaction  of  human 
desire. 

Growin-g,  or  utilizing  the  vital  forces  of  nature,  as  by 
raising  vegetables  or  animals. 

Exchanging,  or  utilizing,  so  as  to  add  to  the  general 
sum  of  wealth,  the  higher  powers  of  those  natural  forces 
which  vary  with  locality,  or  of  those  human  forces  which 
vary  with  situation,  occupation,  or  character. 

In  each  of  these  three  modes  of  production  capital 
may  aid  labor — or,  to  speak  more  precisely,  in  the  first 
mode  capital  may  aid  labor,  but  is  not  absolutely  necessary; 
in  the  others  capital  must  aid  labor,  or  is  necessary. 

Now,  while  by  adapting  capital  in  proper  forms  we 
may  increase  the  effective  power  of  labor  to  impress 
upon  matter  the  character  of  wealth,  as  when  we  adapt 
wood  and  iron  to  the  form  and  use  of  a  plane;  or  iron. 


Chap.  111.     INTEREST   AND   THE   CAUSE   Oi'    INTEREST.  187 

coal,  water,  and  oil  to  the  form  and  use  of  a  steam 
engine;  or  stone,  clay,  timber,  and  iron  to  that  of  a 
building,  yet  the  characteristic  of  this  use  of  capital  is, 
that  the  benefit  is  in  the  use.  When,  however,  we  em- 
ploy capital  in  the  second  of  these  modes,  as  when  we 
plant  grain  in  the  ground,  or  place  animals  on  a  stock 
farm,  or  put  away  wine  to  improve  with  age,  the  benefit 
arises,  not  from  the  use,  but  from  the  increase.  And  so, 
when  we  employ  capital  in  the  third  of  these  modes,  and 
instead  of  using  a  thing  we  exchange  it,  the  benefit  is  in 
the  increase  or  greater  value  of  the  things  received  in 
return. 

Primarily,  the  benefits  which  arise  from  use  go  to  labor, 
and  the  benefits  which  arise  from  increase,  to  capital. 
But,  inasmuch  as  the  division  of  labor  and  the  inter- 
changeability  of  wealth  necessitate  and  imply  an  averag- 
ing of  benefits,  in  so  far  as  these  different  modes  of  pro- 
duction correlate  with  each  other,  the  benefits  that  arise 
from  one  will  average  Avith  the  benefits  that  arise  from 
the  others,  for  neither  labor  nor  capital  will  be  devoted 
to  any  mode  of  production  while  any  other  mode  which 
is  open  to  them  will  yield  a  greater  return.  That  is  to 
say,  labor  expended  in  the  first  mode  of  production  will 
get,  not  the  whole  return,  but  the  return  minus  such  part 
as  is  necessary  to  give  to  capital  such  an  increase  as  it 
could  have  secured  in  the  other  modes  of  production,  and 
capital  engaged  in  the  second  and  third  modes  will  ob- 
tain, not  the  whole  increase,  but  the  increase  minus  what 
is  sufficient  to  give  to  labor  such  reward  as  it  could  have 
secured  if  expended  in  the  first  mode. 

Thus  interest  springs  from  the  power  of  increase  which 
the  reproductive  forces  of  nature,  and  the  in  effect  anal- 
ogous capacity  for  exchange,  give  to  capital.  It  is  not 
an  arbitrary,  but  a  natural  thing;  it  is  not  the  result  of  a 
particular  social  organization,  but  of  laws  of  the  universe 
which  underlie  society.     It  is,  therefore,  just. 


188  THE   LAWS   OF   DISTRIBUTION^.  Book  III 

They  who  talk  about  abolishing  interest  fall  into  an 
error  similar  to  that  previously  pointed  out  as  giving  its 
plausibility  to  the  doctrine  that  wages  are  drawn  from 
capital.  When  they  thus  think  of  interest,  they  think 
only  of  that  which  is  paid  by  the  user  of  capital  to  the 
owner  of  capital.  But,  manifestly,  this  is  not  all  inter- 
est, but  only  some  interest.  Whoever  uses  capital  and 
obtains  the  increase  it  is  capable  of  giving  receives  inter- 
est. If  I  plant  and  care  for  a  tree  until  it  comes  to 
maturity,  I  receive,  in  its  fruit,  interest  upon  the  capital 
I  have  thus  accumulated — that  is,  the  labor  I  have  ex- 
pended. If  I  raise  a  cow,  the  milk  which  she  yields  me, 
morning  and  evening,  is  not  merely  the  reward  of  the 
labor  then  exerted;  but  interest  upon  the  capital  which 
my  labor,  expended  in  raising  her,  has  accumulated  in 
the  cow.  And  so,  if  I  use  my  own  capital  in  directly  aid- 
ing production,  as  by  machinery,  or  in  indirectly  aiding 
production,  in  exchange,  I  receive  a  special  and  dis- 
tinguishable advantage  from  the  reproductive  character 
of  capital,  which  is  as  real,  though  perhaps  not  as  clear, 
as  though  I  had  lent  my  capital  to  another  and  he  had 
paid  me  interest. 


CHAPTER  IV. 

OF  SPURIOUS  CAPITAL  AJND  OF   PROFITS  OFTEN   MISTAKEN 

FOR   INTEREST. 

The  belief  that  interest  is  the  robbery  of  industry  is,  I 
am  persuaded,  in  large  part  due  to  a  failure  to  discrim- 
inate between  what  is  really  capital  and  what  is  not,  and 
between  profits  which  are  properly  interest  and  profits 
which  arise  from  other  sources  than  the  use  of  capital. 
In  the  speech  and  literature  of  the  day  every  one  is 
styled  a  capitalist  who  possesses  what,  independent  of 
his  labor,  Avill  yield  him  a  return,  while  whatever  is  thus 
received  is  spoken  of  as  the  earnings  or  takings  of  capi- 
tal, and  we  everywhere  hear  of  the  conflict  of  labor  and 
capital.  Whether  there  is,  in  reality,  any  conflict  be- 
tween labor  and  capital,  I  do  not  yet  ask  the  reader  to 
make  up  his  mind;  but  it  will  be  well  here  to  clear  away 
some  misapprehensions  which  confuse  the  judgment. 

Attention  has  already  been  called  to  the  fact  that  land 
values,  which  constitute  such  an  enormous  part  of  what 
is  commonly  called  capital,  are  not  capital  at  all;  and 
that  rent,  which  is  as  commonly  included  in  the  receipts 
of  capital,  and  which  takes  an  ever-increasing  portion  of 
the  produce  of  an  advancing  community,  is  not  the  earn- 
ings of  capital,  and  must  be  carefully  separated  from  in- 
terest. It  is  not  necessary  now  to  dwell  further  upon 
this  point.  Attention  has  likewise  been  called  to  the 
fact  that  the  stocks,  bonds,  etc.,  which  constitute  an- 
other great  part  of  what  is  commonly  called  capital, 
are  not  capital  at  all;  but,  in  some  of  their  shapes,  these 
evidences   of  indebtedness  so  closely   resemble  capital, 


190  THE   LAWS   OF  DISTKIBUTION.  Book  in. 

and  in  some  cases  actually  perform,  or  seem  to  perform, 
the  functions  of  capital,  while  they  yield  a  return  to  their 
owners  which  is  not  only  spoken  of  as  interest,  but  has 
every  semblance  of  interest,  that  it  is  worth  while,  before 
attempting  to  clear  the  idea  of  interest  from  some  other 
ambiguities  that  beset  it,  to  speak  again  of  these  at 
greater  length. 

Nothing  can  be  capital,  let  it  always  be  remembered, 
that  is  not  wealth — that  is  to  say,  nothing  can  be  capital 
that  does  not  consist  of  actual,  tangible  things,  not  the 
spontaneous  offerings  of  nature,  which  have  in  them- 
selves, and  not  by  proxy,  the  power  of  directly  or  indi- 
rectly ministering  to  human  desire. 

Thus,  a  government  bond  is  not  capital,  nor  yet  is  it 
the  representative  of  capital.  The  capital  that  was  once 
received  for  it  by  the  government  has  been  consumed  un- 
productively — blown  away  from  the  mouths  of  cannon, 
used  up  in  war  ships,  expended  in  keeping  men  march- 
ing and  drilling,  killing  and  destroying.  The  bond  can- 
not represent  capital  that  has  been  destroyed.  It  does 
not  represent  capital  at  all.  It  is  simply  a  solemn  decla- 
ration that  the  government  will,  some  time  or  other, 
take  by  taxation  from  the  then  existing  stock  of  the  peo- 
ple, so  much  wealth,  which  it  will  turn  over  to  the  holder 
of  the  bond;  and  that,  in  the  meanwhile,  it  will,  from 
time  to  time,  take,  in  the  same  way,  enough  to  make  up 
to  the  holder  the  increase  which  so  much  capital  as  it 
some  day  promises  to  give  him  would  yield  him  were  it 
actually  in  his  possession.  The  immense  sums  which  are 
thus  taken  from  the  produce  of  every  modern  country  to 
pay  interest  on  public  debts  are  not  the  earnings  or  in- 
crease of  capital — are  not  really  interest  in  the  strict 
sense  of  the  term,  but  are  taxes  levied  on  the  produce  of 
labor  and  capital,  leaving  so  much  less  for  wages  and  so 
much  less  for  real  interest. 

But,  supposing  the  bonds  have  been  issued  for  the 


Chap.  IV.       OF   SPURIOUS   CAPITAL   AND    INTEREST.  191 

deepening  of  a  riverbed,  the  construction  of  lighthouses, 
or  the  erection  of  a  public  market;  or  supposing,  to  em- 
body the  same  idea  while  changing  the  illustration,  they 
have  been  issued  by  a  railroad  company.  Here  they  do 
represent  capital,  existing  and  applied  to  productive 
uses,  and  like  stock  in  a  dividend  paying  company  may 
be  considered  as  evidences  of  the  ownership  of  capital. 
But  they  can  be  so  considered  only  in  so  far  as  they  act- 
ually represent  capital,  and  not  as  they  have  been  issued 
in  excess  of  the  capital  used.  Nearly  all  our  railroad 
companies  and  other  incorporations  are  loaded  down  in 
this  way.  Where  one  dollar's  worth  of  capital  has  been 
really  used,  certificates  for  two,  three,  four,  five,  or  even 
ten,  have  been  issued,  and  upon  this  fictitious  amount 
interest  or  dividends  are  paid  with  more  or  less  regu- 
larity. Now,  what,  in  excess  of  the  amount  due  as  in- 
terest to  the  real  capital  invested,  is  thus  earned  by  these 
companies  and  thus  paid  out,  as  well  as  the  large  sums 
absorbed  by  managing  rings  and  never  accounted  for,  is 
evidently  not  taken  from  the  aggregate  produce  of  the 
community  on  account  of  the  services  rendered  by  capi- 
tal— it  is  not  interest.  If  we  are  restricted  to  the  ter- 
minology of  economic  writers  who  decompose  profits  into 
interest,  insurance,  and  wages  of  superintendence,  it 
must  fall  into  the  category  of  wages  of  superintendence. 

But  while  wages  of  superintendence  clearly  enough 
include  the  income  derived  from  such  personal  qualities 
as  skill,  tact,  enterprise,  organizing  ability,  inventive 
power,  character,  etc.,  to  the  profits  we  are  speaking  of 
there  is  another  contributing  element,  which  can  only  ar- 
bitrarily be  classed  with  these — the  element  of  monopoly. 

"When  James  I.  granted  to  his  minion  the  exclusive 
privilege  of  making  gold  and  silver  thread,  and  prohib- 
ited, under  severe  penalties,  every  one  else  from  making 
such  thread,  the  income  which  Buckingham  enjoyed  in 
consequence  did  not  arise  from  the  interest  upon  the 


192  THE   LAWS  OF  DISTRIBUTION.  Book  III. 

capital  invested  in  the  manufacture,  nor  from  the  skill, 
etc.,  of  those  who  really  conducted  the  operations,  but 
from  what  he  got  from  the  king — viz.,  the  exclusive 
privilege — in  reality  the  power  to  levy  a  tax  for  his  own 
purposes  upon  all  the  users  of  such  thread.  From  a 
similar  source  comes  a  large  part  of  the  profits  which 
are  commonly  confounded  with  the  earnings  of  capital. 
Receipts  from  the  patents  granted  for  a  limited  term  of 
years  for  the  purpose  of  encouraging  invention  are  clearly 
attributable  to  this  source,  as  are  the  returns  derived  from 
monopolies  created  by  protective  tariffs  under  the  pre- 
tense of  encouraging  home  industry.  But  there  is  an- 
other far  more  insidious  and  far  more  general  form  of 
monopoly.  In  the  aggregation  of  large  masses  of  capital 
under  a  common  control  there  is  developed  a  new  and 
essentially  different  power  from  that  power  of  increase 
which  is  a  general  characteristic  of  capital  and  which 
gives  rise  to  interest.  While  the  latter  is,  so  to  speak, 
constructive  in  its  nature,  the  power  which,  as  aggrega- 
tion proceeds,  rises  upon  it  is  destructive.  It  is  a  power 
of  the  same  kind  as  that  which  James  granted  to  Buck- 
ingham, and  it  is  often  exercised  with  as  reckless  a  dis- 
regard, not  only  of  the  industrial,  but  of  the  personal 
rights  of  individuals.  A  railroad  company  approaches  a 
small  town  as  a  highwayman  approaches  his  victim. 
The  threat,  "If  you  do  not  accede  to  our  terms  we  will 
leave  your  town  two  or  three  miles  to  one  side!"  is  as 
efficacious  as  the  "Stand  and  deliver,"  when  backed  by 
a  cocked  pistol.  For  the  threat  of  the  railroad  company 
is  not  merely  to  deprive  the  town  of  the  benefits  which 
the  railroad  might  give;  it  is  to  put  it  in  a  far  worse  po- 
sition than  if  no  railroad  had  been  built.  Or  if,  where 
there  is  water  communication,  an  opposition  boat  is  put 
on;  rates  are  reduced  until  she  is  forced  off,  and  then 
the  public  are  compelled  to  pay  the  cost  of  the  operation, 
just  as  the  Rohillas  were  obliged  to  pay  the  forty  lacs 


Chap.  IV.       OF   SPURIOUS   CAPITAL   AND   INTEREST.  193 

with  -which  Surajah  Dowlah  hired  of  "Warren  Hastings  an 
English  force  to  assist  him  in  desolating  their  country 
and  decimating  their  people.  And  just  as  robbers  unite 
to  plunder  in  concert  and  divide  the  spoil,  so  do  the 
trunk  lines  of  railroad  unite  to  raise  rates  and  pool  their 
earnings,  or  the  Pacific  roads  form  a  combination  with 
the  Pacific  Mail  Steamship  Company  by  which  toll  gates 
are  virtually  established  on  land  and  ocean.  And  just  as 
Buckingham's  creatures,  under  authority  of  the  gold 
thread  patent,  searched  private  houses,  and  seized  papers 
and  persons  for  purposes  of  lust  and  extortion,  so  does 
the  great  telegraph  company  which,  by  the  power  of  as- 
sociated capital  deprives  the  people  of  the  United  States 
of  the  full  benefits  of  a  beneficent  invention,  tamper 
with  correspondence  and  crush  out  newspapers  which 
offend  it. 

It  is  necessary  only  to  allude  to  these  things,  not  to 
dwell  on  them.  Every  one  knows  the  tyranny  and 
rapacity  with  which  capital  when  concentrated  in  large 
amounts  is  frequently  wielded  to  corrupt,  to  rob,  and  to 
destroy.  What  I  wish  to  call  the  reader's  attention  to  is 
that  profits  thus  derived  are  not  to  be  confounded  with 
the  legitimate  returns  of  capital  as  an  agent  of  produc- 
tion. They  are  for  the  most  part  to  be  attributed  to  a 
maladjustment  of  forces  in  the  legislative  department  of 
government,  and  to  a  blind  adherence  to  ancient  barbar- 
isms and  the  superstitious  reverence  for  the  technicalities 
of  a  narrow  profession  in  the  administration  of  law;  while 
the  general  cause  which  in  advancing  communities  tends, 
with  the  concentration  of  wealth,  to  the  concentration 
of  power,  is  the  solution  of  the  great  problem  we  are  seek- 
ing for,  but  have  not  yet  found. 

Any  analysis  will  show  that  much  of  the  profits  which 
are,  in  common  thought,  confounded  with  interest  are  in 
reality  due,  not  to  the  power  of  capital,  but  to  the 
power  of  concentrated  capital,  or  of  concentrated  capital 


194  THE  LAWS  OF  DISTRIBUTION.  Book  III. 

acting  upon  bad  social  adjustments.  And  it  will  also 
show  that  what  are  clearly  and  properly  wages  of  super- 
intendence are  very  frequently  confounded  with  the 
earnings  of  capital. 

And,  so,  profits  properly  due  to  the  elements  of  risk 
are  frequently  confounded  with  interest.  Some  people 
acquire  wealth  by  taking  chances  which  to  the  majority 
of  people  must  necessarily  bring  loss.  Such  are  many 
forms  of  speculation,  and  especially  that  mode  of 
gambling  known  as  stock  dealing.  Nerve,  judgment, 
the  possession  of  capital,  skill  in  what  in  lower  forms  of 
gambling  are  known  as  the  arts  of  the  confidence  man 
and  blackleg,  give  advantage  to  the  individual;  but, 
just  as  at  a  gaming  table,  whatever  one  gains  some  one 
else  must  lose. 

Now,  taking  the  great  fortunes  that  are  so  often  re- 
ferred to  as  exemplifying  the  accumulative  power  of  capi- 
tal— the  Dukes  of  Westminster  and  Marquises  of  Bute, 
the  Rothschilds,  Astors,  Stewarts,  Vanderbilts,  Goulds, 
Stanfords,  and  Floods — it  is  upon  examination  readily 
seen  that  they  have  been  built  up,  in  greater  or  less  part, 
not  by  interest,  but  by  elements  such  as  we  have  been 
reviewing. 

How  necessary  it  is  to  note  the  distinctions  to  which  I 
have  been  calling  attention  is  shown  in  current  discus- 
sions, where  the  shield  seems  alternately  white  or  black 
as  the  standpoint  is  shifted  from  one  side  to  the  other. 
On  the  one  hand  we  are  called  upon  to  see,  in  the  exist- 
ence of  deep  poverty  side  by  side  with  vast  accumula- 
tions of  wealth,  the  aggressions  of  capital  on  labor,  and 
in  reply  it  is  pointed  out  that  capital  aids  labor,  and 
hence  we  are  asked  to  conclude  that  there  is  nothing 
unjust  or  unnatural  in  the  wide  gulf  between  rich  and 
poor;  that  wealth  is  but  the  reward  of  industry,  intelli- 
gence, and  thrift;  and  poverty  but  the  punishment  of 
indolence,  ignorance,  and  imprudence. 


CHAPTER  V. 

THE   LAW  OF  INTEREST. 

Let  US  turn  now  to  the  law  of  interest,  keeping  in 
mind  two  things  to  which  attention  has  heretofore  been 
called — viz: 

First — That  it  is  not  capital  which  employs  labor,  but 
labor  which  employs  capital. 

Second — That  capital  is  not  a  fixed  quantity,  but  can 
always  be  increased  or  decreased,  (1)  by  the  greater  or 
less  application  of  labor  to  the  production  of  capital,  and 
(2)  by  the  conversion  of  wealth  into  capital,  or  capital 
into  wealth,  for  capital  being  but  wealth  applied  in  a  cer- 
tain way,  wealth  is  the  larger  and  inclusive  term. 

It  is  manifest  that  under  conditions  of  freedom  the 
maximum  that  can  be  given  for  the  use  of  capital  will  be 
the  increase  it  will  bring,  and  the  minimum  or  zero  will 
be  the  replacement  of  capital;  for  above  the  one  point 
the  borrowing  of  capital  would  involve  a  loss,  and  below 
the  other,  capital  could  not  be  maintained. 

Observe,  again:  It  is  not,  as  is  carelessly  stated  by 
some  writers,  the  increased  eflSciency  given  to  labor  by 
the  adaptation  of  capital  to  any  special  form  or  use  which 
fixes  this  maximum,  but  the  average  power  of  increase 
which  belongs  to  capital  generally.  The  power  of  apply- 
ing itself  in  advantageous  forms  is  a  power  of  labor, 
which  capital  as  capital  cannot  claim  nor  share.  A  bow 
and  arrows  will  enable  an  Indian  to  kill,  let  us  say,  a 
buffalo  every  day,  while  with  sticks  and  stones  he  could 
hardly  kill  one  in  a  week;  but  the  weapon  maker  of  the 
tribe  could  not  claim  from  the  hunter  six  out  of  every 


196  THE  LAWS   OF  DISTRIBUTION.  Book  III. 

seven  bufialoes  killed  as  a  return  for  the  use  of  a  bow 
and  arrows;  nor  will  capital  invested  in  a  woolen  factory 
yield  to  the  capitalist  the  difference  between  the  produce 
of  the  factory  and  what  the  same  amount  of  labor  could 
have  obtained  with  the  spinning-wheel  and  handloom. 
William  when  he  borrows  a  plane  from  James  does  not 
in  that  obtain  the  advantage  of  the  iucreased  eflBciencyof 
labor  when  using  a  plane  for  the  smoothing  of  boards  over 
what  it  has  when  smoothing  them  with  a  shell  or  flint. 
The  progress  of  knowledge  has  made  the  advantage  in- 
volved in  the  use  of  planes  a  common  property  and  power 
of  labor.  What  he  gets  from  James  is  merely  such  ad- 
vantage as  the  element  of  a  year's  time  will  give  to  the 
possession  of  so  much  capital  as  is  represented  by  the 
plane. 

Now,  if  the  vital  forces  of  nature  which  give  an  ad- 
vantage to  the  element  of  time  be  the  cause  of  interest, 
it  would  seem  to  follow  that  this  maximum  rate  of  inter- 
est would  be  determined  by  the  strength  of  these  forces 
and  the  extent  to  which  they  are  engaged  in  production. 
But  while  the  reproductive  force  of  nature  seems  to  vary 
enormously,  as,  for  instance,  between  the  salmon,  which 
spawns  thousands  of  eggs,  and  the  whale,  which  brings 
forth  a  single  calf  at  intervals  of  years;  between  the  rab- 
bit and  the  elephant,  the  thistle  and  the  gigantic  red- 
wood, it  appears  from  the  way  the  natural  balance  is 
maintained  that  there  is  an  equation  between  the  repro- 
ductive and  destructive  forces  of  nature,  which  in  effect 
brings  the  principle  of  increase  to  a  uniform  point.  This 
natural  balance  man  has  within  narrow  limits  the  power 
to  disturb,  and  by  the  modification  of  natural  conditions 
may  avail  himself  at  will  of  the  varying  strength  of  the 
reproductive  force  in  nature.  But  when  he  does  so, 
there  arises  from  the  wide  scope  of  his  desires  another 
principle  which  brings  about  in  the  increase  of  wealth  a 
similar  equation  and  balance  to  that  which  is  effected  in 


Chap.  V.  THE   LAW   OF   INTEREST.  197 

nature  between  the  different  forms  of  life.  This  equa- 
tion exhibits  itself  through  values.  If,  in  a  country 
adapted  to  both,  I  go  to  raising  rabbits  and  you  to  rais- 
ing horses,  my  rabbits  may,  until  the  natural  limit  is 
reached,  increase  faster  than  your  horses.  But  my  capi- 
tal will  not  increase  faster,  for  the  effect  of  the  varying 
rates  of  increase  will  be  to  lower  the  value  of  rabbits  as 
compared  with  horses,  and  to  increase  the  value  of  horses 
as  compared  with  rabbits. 

Though  the  varying  strength  of  the  vital  forces  of 
nature  is  thus  brought  to  uniformity,  there  may  be  a  dif- 
ference in  the  different  stages  of  social  development  as  to 
the  proportionate  extent  to  which,  in  the  aggregate  pro- 
duction of  wealth,  these  vital  forces  are  enlisted.  But 
as  to  this,  there  are  two  remarks  to  be  made.  In  the 
first  place,  although  in  such  a  country  as  England  the 
part  taken  by  manufactures  in  the  aggregate  wealth  pro- 
duction has  very  much  increased  as  compared  with  the 
part  taken  by  agriculture,  yet  it  is  to  be  noticed  that  to 
a  very  great  extent  this  is  true  only  of  the  political  or 
geographical  division,  and  not  of  the  industrial  commu- 
nity. For  industrial  communities  are  not  limited  by 
political  divisions,  or  bounded  by  seas  or  mountains. 
They  are  limited  only  by  the  scope  of  their  exchanges, 
and  the  proportion  which  in  the  industrial  economy  of 
England  agriculture  and  stock-raising  bear  to  maufac- 
tures  is  averaged  with  Iowa  and  Illinois,  with  Texas  and 
California,  with  Canada  and  India,  with  Queensland  and 
the  Baltic — in  short,  with  every  country  to  which  the 
world-wide  exchanges  of  England  extend.  In  the  next 
place,  it  is  to  be  remarked  that  although  in  the  progress 
of  civilization  the  tendency  is  to  the  relative  increase  of 
manufactures,  as  compared  with  agriculture,  and  con- 
sequently to  a  proportionately  less  reliance  upon  the 
reproductive  forces  of  nature,  yet  this  is  accompanied 
by  a  corresponding  extension  of  exchanges,  and  hence  a 


198  THE   LAWS   OF   DISTRIBUTION.  Book  III. 

greater  calling  in  of  the  power  of  increase  which  thus 
arises.  So  these  tendencies,  to  a  great  extent,  and,  prob- 
ably, so  far  as  we  have  yet  gone,  completely,  balance  each 
other,  and  preserve  the  equilibrium  which  fixes  the  aver- 
age increase  of  capital,  or  the  normal  rate  of  interest. 

Now,  this  normal  point  of  interest,  which  lies  between 
the  necessary  maximum  and  the  necessary  minimum  of 
the  return  to  capital,  must,  wherever  it  rests,  be  such 
that  all  things  (such  as  the  feeling  of  security,  desire  for 
accumulation,  etc.)  considered,  the  reward  of  capital  and 
the  reward  of  labor  will  be  equal — that  is  to  say,  will  give 
an  equally  attractive  result  for  the  exertion  or  sacrifice 
involved.  It  is  impossible,  perhaps,  to  formulate  this 
point,  as  wages  are  habitually  estimated  in  quantity  and 
interest  in  a  ratio;  but  if  we  suppose  a  given  quantity  of 
wealth  to  be  the  produce  of  a  given  amount  of  labor,  co- 
operating for  a  stated  time  with  a  certain  amount  of 
capital,  the  proportion  in  which  the  produce  would  be 
divided  between  the  labor  and  the  capital  would  afford 
a  comparison.  There  must  be  such  a  point  at,  or  rather, 
about,  which  the  rate  of  interest  must  tend  to  settle; 
since,  unless  such  an  equilibrium  were  efEected,  labor 
would  not  accept  the  use  of  capital,  or  capital  would  not 
be  placed  at  the  disposal  of  labor.  For  labor  and  capital 
are  but  different  forms  of  the  same  thing — 'human  exer- 
tion. Capital  is  produced  by  labor;  it  is,  in  fact,  but 
labor  impressed  upon  matter — labor  stored  up  in  matter, 
to  be  released  again  as  needed,  as  the  heat  of  the  sun 
stored  up  in  coal  is  released  in  the  furnace.  The  use  of 
capital  in  production  is,  therefore,  but  a  mode  of  labor. 
As  capital  can  be  used  only  by  being  consumed,  its  use 
is  the  expenditure  of  labor,  and  for  the  maintenance  of 
capital,  its  production  by  labor  must  be  commensurate 
with  its  consumption  in  aid  of  labor.  Hence  the  prin- 
ciple that,  under  circumstances  which  permit  free  com- 
petition, operates  to  bring  wages  to  a  common  standard 


Chap.  V.  THE   LAW   OF   INTEREST.  199 

and  profits  to  a  substantial  equality — the  principle  that 
men  will  seek  to  gratify  their  desires  with  the  least  exer- 
tion— operates  to  establish  and  maintain  this  equilibrium 
between  wages  and  interest. 

This  natural  relation  between  interest  and  wages — tnis 
equilibrium  at  which  both  will  represent  equal  returns  to 
equal  exertions — may  be  stated  in  a  form  which  suggests 
a  relation  of  opposition;  but  this  opposition  is  only  ap- 
parent. In  a  partnership  between  Dick  and  Harry,  the 
statement  that  Dick  receives  a  certain  proportion  of 
the  profits  implies  that  the  portion  of  Harry  is  less  or 
greater  as  Dick's  is  greater  or  less;  but  where,  as  in  this 
case,  each  gets  only  what  he  adds  to  the  common  fund, 
the  increase  of  the  jDortion  of  the  one  does  not  decrease 
what  the  other  receives. 

And  this  relation  fixed,  it  is  evident  that  interest  and 
wages  must  rise  and  fall  together,  and  that  interest  can- 
not be  increased  without  increasing  wages;  nor  wages 
lowered  without  depressing  interest.  For  if  wages  fall, 
interest  must  also  fall  in  proportion,  else  it  becomes 
more  profitable  to  turn  labor  into  capital  than  to  apply 
it  directly;  while,  if  interest  falls,  wages  must  likewise 
proportionately  fall,  or  else  the  increment  of  capital 
would  be  checked. 

We  are,  of  course,  not  speaking  of  particular  wages 
and  particular  interest,  but  of  the  general  rate  of  wages 
and  the  general  rate  of  interest,  meaning  always  by  inter- 
est the  return  which  capital  can  secure,  less  insurance 
and  wages  of  superintendence.  In  a  particular  case,  or 
a  particular  employment,  the  tendency  of  wages  and  in- 
terest to  an  equilibrium  maybe  impeded;  but  between  the 
general  rate  of  wages  and  the  general  rate  of  interest, 
this  tendency  must  be  prompt  to  act.  For  though  in  a 
particular  branch  of  producton  the  line  may  be  clearly 
drawn  between  those  who  furnish  labor  and  those  who 
furnish  capital,  yet  even  in  communities  where  there  is 


200  THE   LAWS   OF   DISTRIBUTION.  Book  III. 

the  sharpest  distinction  between  the  general  class  labor- 
ers and  the  general  class  capitalists,  these  two  classes 
shade  off  into  each  other  by  imperceptible  gradations, 
and  on  the  extremes  where  the  two  classes  meet  in  the 
same  persons,  the  interaction  which  restores  equilibrium, 
or  rather  prevents  its  disturbance,  can  go  on  without  ob- 
struction, whatever  obstacles  may  exist  where  the  separa- 
tion is  complete.  And,  furthermore,  it  must  be  remem- 
bered, as  has  before  been  stated,  that  capital  is  but  a 
portion  of  wealth,  distinguished  from  wealth  generally 
only  by  the  purpose  to  which  it  is  applied,  and,  hence, 
the  whole  body  of  wealth  has  upon  the  relations  of  capi- 
tal and  labor  the  same  equalizing  effect  that  a  fly-wheel 
has  upon  the  motion  of  machinery,  taking  up  capital 
when  it  is  in  excess  and  giving  it  out  again  when  there 
is  a  deficiency,  just  as  a  jeweler  may  give  his  wife  dia- 
monds to  wear  when  he  has  a  superabundant  stock,  and 
put  them  in  his  showcase  again  when  his  stock  becomes 
reduced.  Thus  any  tendency  on  the  part  of  interest  to 
rise  above  the  equilibrium  with  wages  must  immediately 
beget  not  only  a  tendency  to  direct  labor  to  the  produc- 
tion of  capital,  but  also  the  application  of  wealth  to  the 
uses  of  capital;  while  any  tendency  of  wages  to  rise  above 
the  equilibrium  with  interest  must  in  like  manner  beget 
not  only  a  tendency  to  turn  labor  from  the  production  of 
capital,  but  also  to  lessen  the  proportion  of  capital  by 
diverting  from  a  productive  to  a  non-productive  use 
some  of  the  articles  of  wealth  of  which  capital  is  com- 
posed. 

To  recapitulate:  There  is  a  certain  relation  or  ratio  be- 
tween wages  and  interest,  fixed  by  causes,  which,  if  not 
absolutely  permanent,  slowly  change,  at  which  enough 
labor  will  be  turned  into  capital  to  supply  the  capital 
which,  in  the  degree  of  knowledge,  state  of  the  arts, 
density  of  population,  character  of  occupations,  variety, 
extent  and  rapidity  of  exchanges,  will  be  demanded  for 


Chap.  V.  THE   LAW   OF   INTEREST.  201 

production,  and  this  relation  or  ratio  the  interaction  of 
labor  and  capital  constantly  maintains;  hence  interest 
must  rise  and  fall  with  the  rise  and  fall  of  wages. 

To  illustrate:  The  price  of  flour  is  determined  by  the 
price  of  wheat  and  cost  of  milling.  The  cost  of  milling 
varies  slowly  and  but  little,  the  difference  being,  even  at 
long  intervals,  hardly  perceptible;  while  the  price  of 
wheat  varies  frequently  and  largely.  Hence  we  correctly 
say  that  the  price  of  flour  is  governed  by  the  price  of 
wheat.  Or,  to  put  the  proposition  in  the  same  form  as 
the  preceding:  There  is  a  certain  relation  or  ratio  be- 
tween the  value  of  wheat  and  the  value  of  flour,  fixed  by 
the  cost  of  milling,  which  relation  or  ratio  the  interac- 
tion between  the  demand  for  flour  and  the  supply  of 
wheat  constantly  maintains;  hence  the  price  of  flour 
must  rise  and  fall  with  the  rise  and  fall  of  the  price  of 
wheat. 

Or,  as,  leaving  the  connecting  link,  the  price  of  wheat, 
to  inference,  we  say  that  the  price  of  flour  depends  upon 
the  character  of  the  seasons,  wars,  etc.,  so  may  we  put  the 
law  of  interest  in  a  form  which  directly  connects  it  with 
the  law  of  rent,  by  saying  that  the  general  rate  of  interest 
will  be  determined  by  the  return  to  capital  upon  the  poor- 
est land  to  which  capital  is  freely  'applied — that  is  to  say, 
upon  the  best  land  open  to  it  without  the  payment  of 
rent.  Thus  we  bring  the  law  of  interest  into  a  form 
which  shows  it  to  be  a  corollary  of  the  law  of  rent. 

We  may  prove  this  conclusion  in  another  way:  For 
that  interest  must  decrease  as  rent  increases,  we  can 
plainly  see  if  Ave  eliminate  wages.  To  do  this,  we  must, 
to  be  sure,  imagine  a  universe  organized  on  totally  differ- 
ent principles.  Nevertheless,  we  may  imagine  what 
Carlyle  would  call  a  fool's  paradise,  where  the  production 
of  wealth  went  on  without  the  aid  of  labor,  and  solely  by 
the  reproductive  force  of  capital — ^where  sheep  bore 
ready-made  clothing  on  their  backs,  cows  presented  but- 


202  THE   LAWS   OF   DISTEIBUTION.  Book  III. 

ter  and  cheese,  and  oxen,  when  they  got  to  the  proper 
point  of  fatness,  carved  themselves  into  beefsteaks  and 
roasting  ribs;  where  houses  grew  from  the  seed,  and  a 
jackknife  thrown  upon  the  ground  would  take  root  and 
in  due  time  bear  a  crop  of  assorted  cutlery.  Imagine 
certain  capitalists  transported,  with  their  capital  in  ap- 
propriate forms,  to  such  a  place.  Manifestly,  they  would 
get,  as  the  return  for  their  capital,  the  whole  amount  of 
wealth  it  produced  only  so  long  as  none  of  its  produce 
was  demanded  as  rent.  When  rent  arose,  it  would 
come  out  of  the  produce  of  capital,  and  as  it  increased, 
the  return  to  the  owners  of  capital  must  necessarily 
diminish.  If  we  imagine  the  place  where  capital  pos- 
sessed this  power  of  producing  wealth  without  the  aid  of 
labor  to  be  of  limited  extent,  say  an  island,  we  shall  see 
that  as  soon  as  capital  had  increased  to  the  limit  of  the 
island  to  support  it,  the  return  to  capital  must  fall  to  a 
trifle  above  its  minimum  of  mere  replacement,  and  the 
land  owners  would  receive  nearly  the  whole  produce  as 
rent,  for  the  only  alternative  capitalists  would  have 
would  be  to  throw  their  capital  into  the  sea.  Or,  if  we 
imagine  such  an  island  to  be  in  communication  with  the 
rest  of  the  world,  the  return  to  capital  would  settle  at  the 
rate  of  return  in  other  places.  Interest  there  would  be 
neither  higher  nor  lower  than  anywhere  else.  Kent  would 
obtain  the  whole  of  the  superior  advantage,  and  the 
land  of  such  an  island  would  have  a  great  value. 
To  sum  up,  the  law  of  interest  is  this: 

The  relation  between  luages  and  interest  is  determined 
by  the  average  power  of  iticrease  which  attaches  to  capital 
from  its  use  in  reproductive  modes.  As  rent  arises,  in- 
terest will  fall  as  lo  ages  fall,  or  will  be  determined  by  the 
margin  of  cultivation. 

I  have  endeavored  at  this  length  to  trace  out  and  illus- 
trate the  law  of  interest  more  in  deference  to  the  existing 


Chap.  V.  THE   LAW   OF   INTEREST.  203 

terminology  and  modes  of  thought  than  from  the  real 
necessities  of  our  inquiry,  were  it  unembarrassed  by  be- 
fogging discussions.  In  truth,  the  primary  division  of 
wealth  in  distribution  is  dual,  not  tripartite.  Capital  is 
but  a  form  of  labor,  and  its  distinction  from  labor  is  in 
reality  but  a  subdivision,  just  as  the  division  of  labor  into 
skilled  and  unskilled  would  be.  In  our  examination  we 
have  reached  the  same  point  as  would  have  been  attained 
had  we  simply  treated  capital  as  a  form  of  labor,  and 
sought  the  law  which  divides  the  produce  between  rent 
and  wages;  that  is  to  say,  between  the  possessors  of  the 
two  factors,  natural  substances  and  powers,  and  human 
exertion — which  two  factors  by  their  union  produce  all 
wealth. 


CHAPTER  VI. 

WAGES  AND  THE   LAW  OF  WAGES. 

We  have  by  inference  already  obtained  the  law  of 
wages.  But  to  verify  the  deduction  and  to  strip  the 
subject  of  all  ambiguities,  let  us  seek  the  law  from  an 
independent  starting  point. 

There  is,  of  course,  no  such  thing  as  a  common  rate  of 
wages,  in  the  sense  that  there  is  at  any  given  time  and 
place  a  common  rate  of  interest.  Wages,  which  include 
all  returns  received  from  labor,  not  only  vary  with  the 
differing  powers  of  individuals,  but,  as  the  organization 
of  society  becomes  elaborate,  vary  largely  as  between 
occupations.  Nevertheless,  there  is  a  certain  general 
relation  between  all  wages,  so  that  we  express  a  clear  and 
well-understood  idea  when  we  say  that  wages  are  higher 
or  lower  in  one  time  or  place  than  in  another.  In  their 
degrees,  wages  rise  and  fall  in  obedience  to  a  common 
law.     What  is  this  law? 

The  fundamental  principle  of  human  action — the  law 
that  is  to  political  economy  what  the  law  of  gravitation 
is  to  physics — is  that  men  seek  to  gratify  their  desires 
with  the  least  exertion.  Evidently,  this  principle  must 
bring  to  an  equality,  through  the  competition  it  induces, 
the  reward  gained  by  equal  exertions  under  similar  cir- 
cumstances. When  men  work  for  themselves,  this 
equalization  will  be  largely  aiiected  by  the  equation  of 
prices;  and  between  those  who  work  for  themselves  and 
those  who  work  for  others,  the  same  tendency  to  equali- 
zation will  operate.  Now,  under  this  principle,  what,  in 
conditions  of  freedom,  will  be  the  terms  at  which  one 
man  can  hire  others  to  work  for  him?    Evidently,  they 


Chap.  VI.  WAGES  AND  THE  LAW  OF  WAGES.  205 

will  be  fixed  by  what  the  men  could  make  if  laboring  for 
themselves.  The  principle  which  will  prevent  him  from 
having  to  give  anything  above  this,  except  what  is  neces- 
sary to  induce  the  change,  will  also  prevent  them  from 
taking  less.  Did  they  demand  more,  the  competition  of 
others  would  prevent  them  from  getting  employment. 
Did  he  offer  less,  none  would  accept  the  terms,  as  they 
could  obtain  greater  results  by  working  for  themselves. 
Thus,  although  the  employer  wishes  to  pay  as  little  as 
possible,  and  the  employee  to  receive  as  much  as  possi- 
ble, wages  will  be  fixed  by  the  value  or  produce  of  such 
labor  to  the  laborers  themselves.  If  wages  are  tempo- 
rarily carried  either  above  or  below  this  line,  a  tendency 
to  carry  them  back  at  once  arises. 

But  the  result,  or  the  earnings  of  labor,  as  is  readily 
seen  in  those  primary  and  fundamental  occupations  in 
which  labor  first  engages,  and  which,  even  in  the  most 
highly  developed  condition  of  society,  still  form  the  base 
of  production,  does  not  depend  merely  upon  the  inten- 
sity or  quality  of  the  labor  itself.  Wealtli  is  the  product 
of  two  factors,  land  and  labor,  and  what  a  given  amount 
of  labor  will  yield  will  vary  with  the  powers  of  the 
natural  opportunities  to  which  it  is  applied.  This  being 
the  case,  the  principle  that  men  seek  to  gratify  their  de- 
sires with  the  least  exertion  will  fix  wages  at  the  produce 
of  such  labor  at  the  point  of  highest  natural  productive- 
ness open  to  it.  Now,  by  virtue  of  the  same  principle, 
the  highest  point  of  natural  productiveness  open  to 
labor  under  existing  conditions  will  be  the  lowest  point 
at  which  production  continues,  for  men,  impelled  by  a 
supreme  law  of  the  human  mind  to  seek  the  satisfaction 
of  their  desires  with  the  least  exertion,  will  not  expend 
labor  at  a  lower  point  of  productiveness  while  a  higher  is 
open  to  them.  Thus  the  wages  which  an  employer  must 
pay  will  be  measured  by  the  lowest  point  of  natural  pro- 
ductiveness to  which  production  extends,  and  wages  will 
rise  or  fall  as  this  point  rises  or  falls. 


206  THE  LAWS  OF  DISTRIBUTIOK.  Book  lU. 

To  illustrate:  In  a  simple  state  of  society,  each  man, 
as  is  the  primitive  mode,  works  for  himself — some  in 
hunting,  let  us  say,  some  in  fishing,  some  in  cultivating 
the  ground.  Cultivation,  we  will  suppose,  has  just  be- 
gun, and  the  land  in  use  is  all  of  the  same  quality,  yield- 
ing a  similar  return  to  similar  exertions.  "Wages,  there- 
fore— for,  though  there  is  neither  employer  nor  em- 
ployed, there  are  yet  wages — will  be  the  full  produce  of 
labor,  and,  making  allowance  for  the  difference  of  agree- 
ableness,  risk,  etc.,  in  the  three  pursuits,  they  will  be  on 
the  average  equal  in  each — that  is  to  say,  equal  exertions 
will  yield  equal  results.  Now,  if  one  of  their  number 
wishes  to  employ  some  of  his  fellows  to  work  for  him  in- 
stead of  for  themselves,  he  must  pay  wages  fixed  by  this 
full,  average  produce  of  labor. 

Let  a  period  of  time  elapse.  Cultivation  has  ex- 
tended, and,  instead  of  land  of  the  same  quality,  em- 
braces lands  of  different  qualities.  Wages,  now,  will  not 
be  as  before,  the  average  produce  of  labor.  They  will  be 
the  average  produce  of  labor  at  the  margin  of  cultiva- 
tion, or  the  point  of  lowest  return.  For,  as  men  seek  to 
satisfy  their  desires  with  the  least  possible  exertion,  the 
point  of  lowest  return  in  cultivation  must  yield  to  labor 
a  return  equivalent  to  the  average  return  in  hunting  and 
fishing.*  Labor  will  no  longer  yield  equal  returns  to 
equal  exertions,  but  those  who  expend  their  labor  on  the 
superior  land  will  obtain  a  greater  produce  for  the  same 
exertion  than  those  who  cultivate  the  inferior  land. 
Wages,  however,  will  still  be  equal,  for  this  excess  which 
the  cultivators  of  the  superior  land  receive  is  in  reality 
rent,  and  if  land  has  been  subjected  to  individual  owner- 
ship will  give  it  a  value.  Now,  if,  under  these  changed 
circumstances,  one  member  of  this  community  wishes  to 
hire  others  to  work  for  him,  he  will  have  to  pay  only 

*  This  equalization  will  be  effected  by  the  equation  of  prices. 


Chap.  VI.  WAGES   AKD   THE   LAW   OF   WAGES.  207 

what  the  labor  yields  at  the  lowest  point  of  cultivation. 
If  thereafter  the  margin  of  cultivation  sinks  to  points  of 
lower  and  lower  productiveness,  so  must  wages  sink;  if, 
on  the  contrary,  it  rises,  so  also  must  wages  rise;  for. 
Just  as  a  free  body  tends  to  take  the  shortest  route  to 
the  earth's  center,  so  do  men  seek  the  easiest  mode  to 
the  gratification  of  their  desires. 

Here,  then,  we  have  the  law  of  wages,  as  a  deduction 
from  a  principle  most  obvious  and  most  universal.  That 
wages  depend  upon  the  margin  of  cultivation — that  they 
will  be  greater  or  less  as  the  produce  which  labor  can  ob- 
tain from  the  highest  natural  opportunities  open  to  it  is 
greater  or  less,  flows  from  the  principle  that  men  will 
seek  to  satisfy  their  wants  with  the  least  exertion. 

Now,  if  we  turn  from  simple  social  states  to  the  complex 
phenomena  of  highly  civilized  societies,  we  shall  find 
upon  examination  that  they  also  fall  under  this  law. 

In  such  societies,  wages  differ  widely,  but  they  still 
bear  a  more  or  less  definite  and  obvious  relation  to  each 
other.  This  relation  is  not  invariable,  as  at  one  time  a 
philosopher  of  repute  may  earn  by  his  lectures  many  fold 
the  wages  of  the  best  mechanic,  and  at  another  can 
hardly  hope  for  the  pay  of  a  footman;  as  in  a  great  city 
occupations  may  yield  relatively  high  wages,  which  in  a 
new  settlement  would  yield  relatively  low  wages;  yet 
these  variations  between  wages  may,  under  all  conditions, 
and  in  spite  of  arbitrary  divergences  caused  by  custom, 
law,  etc.,  be  traced  to  certain  circumstances.  In  one  of 
his  most  interesting  chapters  Adam  Smith  thus  enumer- 
ates the  principal  circumstances  "which  make  up  for  a 
small  pecuniary  gain  in  some  employments  and  counter- 
balance a  great  one  in  others:  First,  the  agreeableness  or 
disagreeableness  of  the  employments  themselves.  Sec- 
ondly, the  easiness  and  cheapness,  or  the  difficulty  and 
expense  of  learning  them.  Thirdly,  the  constancy  or  in- 
constancy of  employment  in  them.     Fourthly,  the  small 


208  THE  LAWS  OF  DISTRIBUTIOK.  Book  III. 

or  great  trust  which  must  be  reposed  in  them.  Fifthly, 
the  probability  or  improbability  of  success  in  them."  *  It 
is  not  necessary  to  dwell  in  detail  on  these  causes  of  vari- 
ation in  wages  between  different  employments.  They 
have  been  admirably  explained  and  illustrated  by  Adam 
Smith  and  the  economists  who  have  followed  him,  who 
have  well  worked  out  the  details,  even  if  they  have  failed 
to  apprehend  the  main  law. 

The  effect  of  all  the  circumstances  which  give  rise  to 
the  differences  between  wages  in  different  occupations 
may  be  included  as  supply  and  demand,  and  it  is  per- 
fectly correct  to  say  that  the  wages  in  different  occupa- 
tions will  vary  relatively  according  to  differences  in  the 
supply  and  demand  of  labor — meaning  by  demand  the 
call  which  the  community  as  a  whole  makes  for  services 
of  the  particular  kind,  and  by  supply  the  relative  amount 
of  labor  which,  under  the  existing  conditions,  can  be  de- 
termined to  the  performance  of  those  particular  services. 
But  though  this  is  true  as  to  the  relative  differences  of 
wages,  when  it  is  said,  as  is  commonly  said,  that  the  gen- 
eral rate  of  wages  is  determined  by  supply  and  demand, 
the  words  are  meaningless.  For  supply  and  demand  are 
but  relative  terms.  The  supply  of  labor  can  only  mean 
labor  offered  in  exchange  for  labor  or  the  produce  of 
labor,  and  the  demand  for  labor  can  only  mean  labor  or 
the  produce  of  labor  offered  in  exchange  for  labor.  Sup- 
ply is  thus  demand,  and  demand  supply,  and,  in  the  whole 
community,  one  must  be  co-extensive  with  the  other. 
This  is  clearly  apprehended  by  the  current  political  econ- 
omy in  relation  to  sales,  and  the  reasoning  of  Kicardo, 
Mill,  and  others,  which  proves  that  alterations  in  supply 
and  demand  cannot   produce  a  general  rise  or  fall  of 

*  This  last,  which  is  analogous  to  the  element  of  risk  in  profits, 
accounts  for  the  high  wages  of  successful  lawyers,  physicians,  con 
tractors,  actors,  etc. 


Chap.  VI.  WAGES   AKD  THE   LAW   OF  WAGES.  209 

values,  though  they  may  cause  a  rise  or  fall  in  the  value 
of  a  particular  thing,  is  as  applicable  to  labor.  "What 
conceals  the  absurdity  of  speaking  generally  of  supply 
and  demand  in  reference  to  labor  is  the  habit  of  consid- 
ering the  demand  for  labor  as  springing  from  capital  and 
as  something  distinct  from  labor;  but  the  analysis  to 
which  this  idea  has  been  heretofore  subjected  has  suffi- 
ciently shown  its  fallacy.  It  is  indeed  evident  from  the 
mere  statement,  that  wages  can  never  permanently  ex- 
ceed the  produce  of  labor,  and  hence  that  there  is  no 
fund  from  which  wages  can  for  any  time  be  drawn,  save 
that  which  labor  constantly  creates. 

But,  though  all  the  circumstances  which  produce  the 
differences  in  wages  between  occupations  may  be  consid- 
ered as  operating  through  supply  and  demand,  they,  or 
rather,  their  effects,  for  sometimes  the  same  cause  oper- 
ates in  both  ways,  may  be  separated  into  two  classes,  ac- 
cording as  they  tend  only  to  raise  apparent  wages  or  as 
they  tend  to  raise  real  wages — that  is,  to  increase  the 
average  reward  for  equal  exertion.  The  high  wages  of 
some  occupations  much  resemble  what  Adam  Smith  com- 
pares them  to,  the  prizes  of  a  lottery,  in  which  the  great 
gain  of  one  is  made  up  from  the  losses  of  many  others. 
This  is  not  only  true  of  the  professions  by  means  of 
which  Dr.  Smith  illustrates  the  principle,  but  is  largely 
true  of  the  wages  of  superintendence  in  mercantile  pur- 
suits, as  shown  by  the  fact  that  over  ninety  per  cent,  of 
the  mercantile  firms  that  commence  business  ultimately 
fail.  The  higher  wages  of  those  occupations  which  can 
be  prosecuted  only  in  certain  states  of  the  weather,  or 
are  otherwise  intermittent  and  uncertain,  are  also  of 
this  class;  while  differences  that  arise  from  hardship, 
discredit,  unheal thiness,  etc.,  imply  differences  of  sac- 
rifice, the  increased  compensation  for  which  only  pre- 
serves the  level  of  equal  returns  for  equal  exertions.  All 
these  differences  are,  in  fact,  equalizations,  arising  from 


210  THE   LAWS   OF   DISTRIBUTION".  Book  III. 

circumstances  which,  to  use  the  words  of  Adam  Smith, 
*'make  up  for  a  small  pecuniary  gain  in  some  employ- 
ments and  counterbalance  a  great  one  in  others."  But, 
besides  these  merely  apparent  differences,  there  are  real 
differences  in  wages  between  occupations,  which  are 
caused  by  the  greater  or  less  rarity  of  the  qualities  re- 
quired— greater  abilities  or  skill,  whether  natural  or 
acquired,  commanding  on  the  average  greater  wages. 
Now,  these  qualities,  whether  natural  or  acquired,  are 
essentially  analogous  to  differences  in  strength  and  quick- 
ness in  manual  labor,  and  as  in  manual  labor  the  higher 
wages  paid  the  man  who  can  do  more  would  be  based 
upon  wages  paid  to  those  who  can  do  only  the  average 
amount,  so  wages  in  the  occupations  requiring  superior 
abilities  and  skill  must  depend  upon  the  common  wages 
paid  for  ordinary  abilities  and  skill. 

It  is,  indeed,  evident  from  observation,  as  it  must  be 
from  theory,  that  whatever  be  the  circumstances  which 
produce  the  differences  of  wages  in  different  occupations, 
and  although  they  frequently  vary  in  relation  to  each 
other,  producing,  as  between  time  and  time,  and  place 
and  place,  greater  or  less  relative  differences,  yet  the  rate 
of  wages  in  one  occupation  is  always  dependent  on  the 
rate  in  another,  and  so  on,  down,  until  the  lowest  and 
widest  stratum  of  wages  is  reached,  in  occupations  where 
the  demand  is  more  nearly  uniform  and  in  which  there  is 
the  greatest  freedom  to  engage. 

For,  although  barriers  of  greater  or  less  difficulty  may 
exist,  the  amount  of  labor  which  can  be  determined  to 
any  particular  pursuit  is  nowhere  absolutely  fixed.  All 
mechanics  could  act  as  laborers,  and  many  laborers  could 
readily  become  mechanics;  all  storekeepers  could  act  as 
shopmen,  and  many  shopmen  could  easily  become  store- 
keepers; many  farmers  would,  upon  inducement,  become 
hunters  or  miners,  fishermen  or  sailors,  and  many  hunt- 
ers, miners,  fishermen,  and  sailors  know  enough  of  farm- 


aiap.  VI.  WAGES   AND  THE   LAW   OF   WAGES.  211 

ing  to  turn  their  hands  to  it  on  demand.  In  each 
occupation  there  are  men  who  unite  it  with  others,  or 
who  alternate  between  occupations,  while  the  young  men 
who  are  constantly  coming  in  to  till  up  the  ranks  of  labor 
are  drawn  in  the  direction  of  the  strongest  inducements 
and  least  resistances.  And  further  than  this,  all  the 
gradations  of  wages  shade  into  each  other  by  imperceptible 
degrees,  instead  of  being  separated  by  clearly  defined 
gulfs.  The  wages,  even  of  the  poorer  paid  mechanics, 
are  generally  higher  than  the  wages  of  simple  laborers, 
but  there  are  always  some  mechanics  who  do  not,  on  the 
whole,  make  as  much  as  some  laborers;  the  best  paid 
lawyers  receive  much  higher  wages  than  the  best  paid 
clerks,  but  the  best  paid  clerks  make  more  than  some 
lawyers,  and  in  fact  the  worst  paid  clerks  make  more 
than  the  worst  paid  lawyers.  Thus,  on  the  verge  of  each 
occupation,  stand  those  to  whom  the  inducements  be- 
tween one  occupation  and  another  are  so  nicely  balanced 
that  the  slightest  change  is  sufficient  to  determiue  their 
labor  in  one  direction  or  another.  Thus,  any  increase  or 
decrease  in  the  demand  for  labor  of  a  certain  kind  can- 
not, except  temporarily,  raise  wages  in  that  occupation 
above,  nor  depress  them  below,  the  relative  level  with 
wages  in  other  occupations,  which  is  determined  by  the 
circumstances  previously  adverted  to,  such  as  relative 
agreeableness  or  continuity  of  employment,  etc.  Even, 
as  experience  shows,  where  artificial  barriers  are  imposed 
to  this  interaction,  such  as  limiting  laws,  guild  regula- 
tions, the  establishment  of  caste,  etc.,  they  may  inter- 
fere with,  but  cannot  prevent,  the  maintenance  of  this 
equilibrium.  They  operate  only  as  dams,  which  pile  up 
the  water  of  a  stream  above  its  natural  level,  but  cannot 
prevent  its  overflow. 

Thus,  although  they  may  from  time  to  time  alter  in 
relation  to  each  other,  as  the  circumstances  which  deter- 
mine relative  levels  change,  yet  it  is  evident  that  wages 


212  THE   LAWS   OF   DISTRIBUTIOisT.  Book  III. 

in  all  strata  must  ultimately  depend  upon  wages  in  the 
lowest  and  widest  stratum — the  general  rate  of  wages 
rising  or  falling  as  these  rise  or  fall. 

Now,  the  primary  and  fundamental  occupations,  upon 
which,  so  to  speak,  all  others  are  built  up,  are  evidently 
those  which  procure  wealth  directly  from  nature;  hence 
the  law  of  wages  in  them  must  be  the  general  law  of 
wages.  And,  as  wages  in  such  occupations  clearly  de- 
pend upon  what  labor  can  produce  at  the  lowest  point  of 
natural  productiveness  to  which  it  is  habitually  applied; 
therefore,  wages  generally  depend  upon  the  margin  of 
cultivation,  or,  to  put  it  more  exactly,  upon  the  highest 
point  of  natural  productiveness  to  which  labor  is  free  to 
apply  itself  without  the  payment  of  rent. 

So   obvious  is  this  law  that  it  is  often  apprehended 
without  being  recognized.     It  is  frequently  said  of  such 
countries  as   California  and  Nevada  that   cheap  labor 
would  enormously  aid  their  development,  as  it  would  en- 
able the  working    of    the    poorer    but    most  extensive 
deposits  of  ore.     A  relation  between  low  wages  and  a 
low  point  of  production  is  perceived  by  those  who  talk 
in  this  way,  but  they  invert  cause  and  effect.     It  is  not 
low  wages  which  will  cause  the  working  of  low-grade  ore, 
but  the  extension  of  production  to  the  lower  point  which 
will  diminish  wages.     If  wages  could  be  arbitrarily  forced 
down,  as  has  sometimes  been  attempted  by  statute,  the 
poorer  mines  would  not  be   worked   so   long  as  richer 
mines  could  be  worked.     But  if  the  margin  of  produc- 
tion were  arbitrarily  forced  down,  as  it  might  be,  were 
the  superior  natural  opportunities  in  the  ownership  of 
those  who  chose  rather  to  wait  for  future  increase  of 
value  than  to  permit  them  to  be  used  now,  wages  would 
necessarily  fall. 

The  demonstration  is  complete.     The  law  of  wages  we 
have  thus  obtained  is  that  which  we  previously  obtained 


Chap.  VI.  WAGES   AND    THE   LAW   OF   WAGES.  213 

as  the  corollary  of  the  law  of  rent,   and  it  completely 
harmonizes  with  the  law  of  interest.     It  is,  that: 

Wages  depend  upon  the  margin  of  production,  or  upo7i 
the  produce  which  labor  can  obtain  at  the  highest  point  of 
natural  productiveness  open  to  it  without  the  payment  of 
rent. 

This  law  of  wages  accords  with  and  explains  universal 
facts  that  without  its  apprehension  seem  unrelated  and 
contradictory.     It  shows  that: 

Where  laud  is  free  and  labor  is  unassisted  by  capital, 
the  whole  produce  will  go  to  labor  as  wages. 

Where  land  is  free  and  labor  is  assisted  by  capital, 
wages  will  consist  of  the  whole  produce,  less  that  part 
necessary  to  induce  the  storing  up  of  labor  as  capital. 

Where  land  is  subject  to  ownership  and  rent  arises, 
wages  will  be  fixed  by  what  labor  could  secure  from  the 
highest  natural  opportunities  open  to  it  without  the 
payment  of  rent. 

Where  natural  opportunities  are  all  monopolized, 
wages  may  be  forced  by  the  competition  among  laborers 
to  the  minimum  at  which  laborers  will  consent  to  repro- 
duce. 

This  necessary  'minimum  of  wages  (which  by  Smith 
and  Ricardo  is  denominated  the  point  of  "natural 
wages,"  and  by  Mill  supposed  to  regulate  wages,  which 
will  be  higher  or  lower  as  the  working  classes  consent  to 
reproduce  at  a  higher  or  lower  standard  of  comfort)  is, 
however,  included  in  the  law  of  wages  as  previously 
stated,  as  it  is  evident  that  the  margin  of  production 
cannot  fall  below  that  point  at  which  enough  will  be  left 
as  wages  to  secure  the  maintenance  of  labor. 

Like  Ricardo's  law  of  rent  of  which  it  is  the  corollary, 
this  law  of  wages  carries  with  it  its  own  proof  and  be- 
comes self-evident  by  mere  statement.  For  it  is  but  an 
application  of  the  central  truth  that  is  the  foundation  of 


214  THE  LAWS   OF   DISTRIBUTION.  Book  III. 

economic  reasoning — that  men  will  seek  to  satisfy  their 
desires  with  the  least  exertion.  The  average  man  will 
not  work  for  an  employer  for  less,  all  things  considered, 
than  he  can  earn  by  working  for  himself;  nor  yet  will  he 
work  for  himself  for  less  than  he  can  earn  by  working 
for  an  employer,  and  hence  the  return  which  labor  can 
secure  from  such  natural  opportunities  as  are  free  to  it 
must  fix  the  wages  which  labor  everywhere  gets.  That 
is  to  say,  the  line  of  rent  is  the  necessary  measure  of  the 
line  of  wages.  In  fact,  the  accepted  law  of  rent  depends 
for  its  recognition  upon  a  previous,  though  in  many  cases 
it  seems  to  be  an  unconscious,  acceptance  of  this  law  of 
wages.  What  makes  it  evident  that  land  of  a  particu- 
lar quality  will  yield  as  rent  the  surplus  of  its  produce 
over  that  of  the  least  productive  land  in  use,  is  the  ap- 
prehension of  the  fact  that  the  owner  of  the  higher 
quality  of  land  can  procure  the  labor  to  work  his  land  by 
the  payment  of  what  that  labor  could  produce  if  exerted 
upon  land  of  the  poorer  quality. 

In  its  simpler  manifestations,  this  law  of  wages  is  rec- 
ognized by  people  who  do  not  trouble  themselves  about 
political  economy,  just  as  the  fact  that  a  heavy  body 
would  fall  to  the  earth  was  long  recognized  by  those  who 
never  thought  of  the  law  of  gravitation.  It  does  not  re- 
quire a  philosopher  to  see  that  if  in  any  country  natural 
opportunities  were  thrown  open  which  would  enable 
laborers  to  make  for  themselves  wages  higher  than  the 
lowest  now  paid,  the  general  rate  of  wages  would  rise; 
while  the  most  ignorant  and  stupid  of  the  placer  miners 
of  early  California  knew  that  as  the  placers  gave  out  or 
were  monopolized,  wages  must  fall.  It  requires  no  fine- 
spun theory  to  explain  why  wages  are  so  high  relatively 
to  production  in  new  countries  where  land  is  yet  unmo- 
nopolized.  The  cause  is  on  the  surface.  One  man  will 
not  work  for  another  for  less  than  his  labor  will  really 
yield,  when  he  can  go  upon  the  next  quarter  section  and 


ChaiJ.  VI.  WAGES   AND   THE    LAW   OF   WAGES.  215 

take  up  a  farm  for  himself.  It  is  only  as  land  becomes 
monopolized  and  these  natural  opportunities  are  shut  off 
from  labor,  that  laborers  are  obliged  to  compete  with 
each  other  for  employment,  and  it  becomes  possible  for 
the  farmer  to  hire  hands  to  do  his  work  while  he  main- 
tains himself  on  the  difference  between  what  their  labor 
produces  and  what  he  pays  them  for  it. 

Adam  Smith  himself  saw  the  cause  of  high  wages  where 
land  was  yet  open  to  settlement,  though  he  failed  to  ap- 
preciate the  importance  and  connection  of  the  fact.  In 
treating  of  the  Causes  of  the  Prosperity  of  Xew  Colonies 
(Chapter  YII,  Book  IV,  "Wealth  of  Nations,")  he  says: 

"  Every  colonist  gets  more  land  than  he  can  possibly  cultivate. 
He  has  no  rent  and  scarce  any  taxes  to  pay.  *  *  He  is  eager, 
therefore,  to  collect  laborers  from  every  quarter  and  to  pay  them  the 
most  liberal  wages.  But  these  liberal  wages,  joined  to  the  plenty 
and  cheapness  of  land,  soon  make  these  laborers  leave  him  in  order 
to  become  landlords  themselves,  and  to  reward  with  equal  liberality 
other  laborers  who  soon  leave  them  for  the  same  reason  they  left 
their  first  masters." 

This  chapter  contains  numerous  expressions  which, 
like  the  opening  sentence  in  the  chapter  on  The  Wages 
of  Labor,  show  that  Adam  Smith  failed  to  appreciate 
the  true  laws  of  the  distribution  of  wealth  only  because 
he  turned  away  from  the  more  primitive  forms  of  society 
to  look  for  first  principles  amid  complex  social  manifes- 
tations, where  he  was  blinded  by  a  pre-acceptod  theory 
of  the  functions  of  capital,  and,  as  it  seems  to  me,  by  a 
vague  acceptance  of  the  doctrine  which,  two  years  after 
his  death,  was  formulated  by  Malthus.  And  it  is  impos- 
sible to  read  the  works  of  the  economists  who  since  the 
time  of  Smith  have  endeavored  to  build  up  and  elucidate 
the  science  of  political  economy  without  seeing  how,  over 
and  over  again,  they  stumble  over  the  law  of  wages  with- 
out once  recognizing  it.  Yet,  "if  it  were  a  dog  it  would 
bite  them!"    Indeed,  it  is  diflBcult  to  resist  the  impres- 


216  THE  LAWS   OF   DISTRIBUTION.  Book  III. 

sion  that  some  of  them  really  saw  this  law  of  wages,  but, 
fearful  of  the  practical  conclusions  to  which  it  would 
lead,  preferred  to  ignore  and  cover  it  up,  rather  than  use 
it  as  the  key  to  problems  which  without  it  are  so  perplex- 
ing. A  great  truth  to  an  age  which  has  rejected  and 
trampled  on  it,  is  not  a  word  of  peace,  but  a  sword! 

Perhaps  it  may  be  well  to  remind  the  reader,  before 
closing  this  chapter,  of  what  has  been  before  stated — 
that  I  am  using  the  word  wages  not  in  the  sense  of  a 
quantity,  but  in  the  sense  of  a  proportion.  When  I  say 
that  wages  fall  as  rent  rises,  I  do  not  mean  that  the 
quantity  of  wealth  obtained  by  laborers  as  wages  is  nec- 
essarily less,  but  that  the  proportion  which  it  bears  to 
the  whole  produce  is  necessarily  less.  The  proportion 
may  diminish  while  the  quantity  remains  the  same  or 
even  increases.  If  the  margin  of  cultivation  descends 
from  the  productive  point  which  we  will  call  25,  to 
the  productive  point  we  will  call  20,  the  rent  of  all 
lands  that  before  paid  rent  will  increase  by  this  differ- 
ence, and  the  proportion  of  the  whole  produce  which 
goes  to  laborers  as  wages  will  to  the  same  extent  dimin- 
ish; but  if,  in  the  meantime,  the  advance  of  the  arts  or 
the  economies  that  become  possible  with  greater  popula- 
tion have  so  increased  the  productive  power  of  labor  that 
at  20  the  same  exertion  will  produce  as  much  wealth 
as  before  at  25,  laborers  will  get  as  wages  as  great  a 
quantity  as  before,  and  the  relative  fall  of  wages  will 
not  be  noticeable  in  any  diminution  of  the  necessaries 
or  comforts  of  the  laborer,  but  only  in  the  increased 
value  of  land  and  the  greater  incomes  and  more  lavish 
expenditure  of  the  rent-receiving  class. 


CHAPTER  VII. 

THE   CORRELATION   AND    CO-ORDINATION  OF  THESE   LAWS. 

The  conclusions  we  have  reached  as  to  the  laws  which 
govern  the  distribution  of  wealth  recast  a  large  and  most 
important  part  of  the  science  of  political  economy,  as  at 
present  taught,  overthrowing  some  of  its  most  highly 
elaborated  theories  and  shedding  a  new  light  on  some  of 
its  most  important  problems.  Yet,  in  doing  this,  no 
disputable  ground  has  been  occupied;  not  a  single  funda- 
mental principle  advanced  that  is  not  already  recognized. 

The  law  of  interest  and  the  law  of  wages  which  we 
have  substituted  for  those  now  taught  are  necessary  de- 
ductions from  the  great  law  which  alone  makes  any 
science  of  political  economy  possible — the  all-compelling 
law  that  is  as  inseparable  from  the  human  mind  as  at- 
traction is  inseparable  from  matter,  and  without  which 
it  would  be  impossible  to  previse  or  calculate  upon  any 
human  action,  the  most  trivial  or  the  most  important. 
This  fundamental  law,  that  men  seek  to  gratify  their  de- 
sires with  the  least  exertion,  becomes,  when  viewed  in  its 
relation  to  one  of  the  factors  of  production,  the  law  of 
rent;  in  relation  to  another,  the  law  of  interest;  and  in 
relation  to  a  third,  the  law  of  wages.  And  in  accepting 
the  law  of  rent,  which,  since  the  time  of  Ricardo,  has 
been  accepted  by  every  economist  of  standing,  and 
which,  like  a  geometrical  axiom,  has  but  to  be  under- 
stood to  compel  assent,  the  law  of  interest  and  law  of 
wages,  as  I  have  stated  them,  are  inferentially  accepted, 
as  its  necessary  sequences.  In  fact,  it  is  only  relatively 
that  they  can  be  called  sequences,  as  in  the  recognition 
of  the  law  of  rent  they  too  must  be  recognized.     For  ou 


218 


THE   LAWS  OF   DISTKIBUTION. 


Book  III. 


what  depends  the  recognition  of  the  law  of  rent?  Evi- 
dently upon  the  recognition  of  the  fact  that  the  effect  of 
competition  is  to  prevent  the  return  to  labor  and  capital 
being  anywhere  greater  than  upon  the  poorest  land  in 
use.  It  is  in  seeing  this  that  we  see  that  the  owner  of 
land  will  be  able  to  claim  as  rent  all  of  its  produce  which 
exceeds  what  would  be  yielded  to  an  equal  application  of 
labor  and  capital  on  the  poorest  land  in  use. 

The  harmony  and  correlation  of  the  laws  of  distribu- 
tion as  we  have  now  apprehended  them  are  in  striking 
contrast  with  the  want  of  harmony  which  characterizes 
these  laws  as  presented  by  the  current  political  economy. 
Let  us  state  them  side  by  side: 


77ie  True  Statement. 

Kent  depends  on  the  margin 
of  cultivation,  rising  as  it 
falls  and  falling  as  it  rises. 

Wages  depend  on  the  mar- 
gin of  cultivation,  falling 
as  it  falls  and  rising  as  it 
rises. 


The  Current  Statement. 

Eent  depends  on  the  margin 
of  cultivation,  rising  as  it 
falls  and  falling  as  it  rises. 

Wages  depend  upon  the 
ratio  between  the  number 
of  laborers  and  the  amount 
of  capital  devoted  to  their 
employment. 

Interest  depends  upon  the 
equation  between  the  sup- 
ply of  and  demand  for 
capital;  or,  as  is  stated  of 
profits,  upon  wages  (or 
the  cost  of  labor),  rising 
as  wages  fall,  and  falling 
as  wages  rise. 

In  the  current  statement  the  laws  of  distribution  have 
no  common  center,  no  mutual  relation;  they  are  not  the 
correlating  divisions  of  a  whole,  but  measures  of  differ- 
ent qualities.  In  the  statement  we  have  given,  they 
spring  from  one  point,  support  and  supplement  each 
other,  and  form  the  correlating  divisions  of  a  complete 
whole. 


Interest  (its  ratio  with  wa- 
ges being  fixed  by  the  net 
power  of  increase  which 
attaches  to  capital)  de- 
pends on  the  margin  of 
cultivation,  falling  as  it 
falls  and  rising  as  it  rises. 


CHAPTER  VIII. 

THE   STATICS   OF   THE   PROBLEM   THUS   EXPLAINED. 

We  have  now  obtained  a  clear,  simple,  and  consistent 
theory  of  the  distribution  of  wealth,  which  accords  with 
first  principles  and  existing  facts,  and  which,  when  under- 
stood, will  commend  itself  as  self-evident. 

Before  working  out  this  theory,  I  have  deemed  it  nec- 
essary to  show  conclusively  the  insufficiency  of  current 
theories;  for,  in  thought,  as  in  action,  the  majority  of 
men  do  but  follow  their  leaders,  and  a  theory  of  wages 
which  has  not  merely  the  support  of  the  highest  names, 
but  is  firmly  rooted  in  common  opinions  and  prejudices, 
will,  until  it  has  been  proved  untenable,  prevent  any 
other  theory  from  being  even  considered,  just  as  the 
theory  that  the  earth  was  the  center  of  the  universe  pre- 
vented any  consideration  of  the  theory  that  it  revolves 
on  its  own  axis  and  circles  round  the  sun,  until  it  was 
clearly  shown  that  the  apparent  movements  of  the 
heavenly  bodies  could  not  be  explained  in  accordance 
with  the  theory  of  the  fixity  of  the  earth. 

There  is  in  truth  a  marked  resemblance  between  the 
science  of  political  economy,  as  at  present  taught,  and 
the  science  of  astronomy,  as  taught  previous  to  the  rec- 
ognition of  the  Copernican  theory.  The  devices  by 
which  the  current  political  economy  endeavors  to  explain 
the  social  phenomena  that  are  now  forcing  themselves 
upon  the  attention  of  the  civilized  world  may  well  be 
compared  to  the  elaborate  system  of  cycles  and  epicycles 
constructed  by  the  learned  to  explain  the  celestial  phe- 
nomena in  a  manner  according  with  the  dogmas  of  author- 


320  THE   LAWS  OF   DISTKIBUTIOIf.  Book  HI. 

ity  and  the  rude  impressions  and  prejudices  of  the  un- 
learned. And,  just  as  the  observations  which  showed 
that  this  theory  of  cycles  and  epicycles  could  not  explain 
all  the  phenomena  of  the  heavens  cleared  the  way  for 
the  consideration  of  the  simpler  theory  that  supplanted 
it,  so  will  a  recognition  of  the  inadequacy  of  the  current 
theories  to  account  for  social  phenomena  clear  the  way 
for  the  consideration  of  a  theory  that  will  give  to  polit- 
ical economy  all  the  simplicity  and  harmony  which  the 
Copernican  theory  gave  to  the  science  of  astronomy. 

But  at  this  point  the  parallel  ceases.  That  "the  fixed 
and  steadfast  earth"  should  be  really  whirling  through 
space  with  inconceivable  velocity  is  repugnant  to  the 
first  apprehensions  of  men  in  every  state  and  situation; 
but  the  truth  I  wish  to  make  clear  is  naturally  perceived, 
and  has  been  recognized  in  the  infancy  of  every  people, 
being  obscured  only  by  the  complexities  of  the  civilized 
state,  the  warpings  of  selfish  interests,  and  the  false  di- 
rection which  the  speculations  of  the  learned  have  taken. 
To  recognize  it,  we  have  but  to  come  back  to  first  prin- 
ciples and  heed  simple  perceptions.  Nothing  can  be 
clearer  than  the  proposition  that  the  failure  of  wages  to 
increase  with  increasing  productive  power  is  due  to  the 
increase  of  rent. 

Three  things  unite  to  production — labor,  capital,  and 
land. 

Three  parties  divide  the  produce — the  laborer,  the 
capitalist,  and  the  land  owner. 

If,  with  an  increase  of  production  the  laborer  gets  no 
more  and  the  capitalist  no  more  it  is  a  necessary  infer- 
ence that  the  land  owner  reaps  the  whole  gain. 

And  the  facts  agree  with  the  inference.  Though 
neither  wages  nor  interest  anywhere  increase  as  material 
progress  goes  on,  yet  the  invariable  accompaniment  and 
mark  of  material  progress  is  the  increase  of  rent — the 
rise  of  land  values. 


Chap.  VIII.      STATICS   OF  THE   PROBLEM  EXPLAINED.  221 

The  increase  of  rent  explains  why  wages  and  interest 
do  not  increase.  The  cause  which  gives  to  the  land 
holder  is  the  cause  which  denies  to  the  laborer  and  capi- 
talist. That  wages  and  interest  are  higher  in  new  than 
in  old  countries  is  not,  as  the  standard  economists  say, 
because  nature  makes  a  greater  return  to  the  application 
of  labor  and  capital,  but  because  land  is  cheaper,  and, 
therefore,  as  a  smaller  proportion  of  the  return  is  taken 
by  rent,  labor  and  capital  can  keep  for  their  share  a 
larger  proportion  of  what  nature  does  return.  It  is  not 
the  total  produce,  but  the  net  produce,  after  rent  has 
been  taken  from  it,  that  determines  what  can  be  divided 
as  wages  and  interest.  Hence,  the  rate  of  wages  and  in- 
terest is  everywhere  fixed,  not  so  much  by  the  produc- 
tiveness of  labor  as  by  the  value  of  land.  Wherever  the 
value  of  land  is  relatively  low,  wages  and  interest  are 
relatively  high;  wherever  land  is  relatively  high,  wages 
and  interest  are  relatively  low. 

If  production  had  not  passed  the  simple  stage  in  which 
all  labor  is  directly  applied  to  the  land  and  all  wages  are 
paid  in  its  produce,  the  fact  that  when  the  land  owner 
takes  a  larger  portion  the  laborer  must  put  up  with  a 
smaller  portion  could  not  be  lost  sight  of. 

But  the  complexities  of  production  in  the  civilized 
state,  in  which  so  great  a  part  is  borne  by  exchange,  and 
so  much  labor  is  bestowed  upon  materials  after  they  have 
been  separated  from  the  land,  though  they  may  to  the 
unthinking  disguise,  do  not  alter  the  fact  that  all  pro- 
duction is  still  the  union  of  the  two  factors,  land  and 
labor,  and  that  rent  (the  share  of  the  land  holder)  can- 
not be  increased  except  at  the  expense  of  wages  (the 
share  of  the  laborer)  and  interest  (the  share  of  capital). 
Just  as  the  portion  of  the  crop,  which  in  the  simpler 
forms  of  industrial  organization  the  owner  of  agricul- 
tural land  receives  at  the  end  of  the  harvest  as  his  rent, 
lessens  the  amount  left  to  the  cultivator  as  wages  and 


232  THE  LAWS  OF  DISTKIBUTION.  Book  III. 

interest,  so  does  the  rental  of  land  on  which  a  manufac- 
turing or  commercial  city  is  built  lessen  the  amount 
which  can  be  divided  as  wages  and  interest  between  the 
laborer  and  capital  there  engaged  in  the  production  and 
exchange  of  wealth. 

In  short,  the  value  of  land  depending  wholly  upon  the 
power  which  its  ownership  gives  of  appropriating  wealth 
created  by  labor,  the  increase  of  land  values  is  always  at 
the  expense  of  the  value  of  labor.  And,  hence,  that  the 
increase  of  productive  power  does  not  increase  wages,  is 
because  it  does  increase  the  value  of  land.  Eent  swal- 
lows up  the  whole  gain  and  pauperism  accompanies 
progress. 

It  is  unnecessary  to  refer  to  facts.  They  will  suggest 
themselves  to  the  reader.  It  is  the  general  fact,  observ- 
able everywhere,  that  as  the  value  of  land  increases,  so 
does  the  contrast  between  wealth  and  want  appear.  It  is 
the  universal  fact,  that  where  the  value  of  land  is  iiigh- 
est,  civilization  exhibits  the  greatest  luxury  side  by  side 
with  the  most  piteous  destitution.  To  see  human  beings 
in  the  most  abject,  the  most  helpless  and  hopeless  con- 
dition, you  must  go,  not  to  the  unfenced  prairies  and  the 
log  cabins  of  new  clearings  in  the  backwoods,  where  man 
single-handed  is  commencing  the  struggle  with  nature, 
and  land  is  yet  worth  nothing,  but  to  the  great  cities, 
where  the  ownership  of  a  little  patch  of  ground  is  a 
fortune. 


BOOK  IV. 

EFFECT  OF  MATERIAL   PROGRESS  UPON  THE 
DISTRIBUTION  OF  WEALTH. 


CHAPTER       I. — THE   DYNAMICS   OF   THE   PROBLEM     YET    TO 

SEEK. 
CHAPTER     II. — EFFECT  OF  INCREASE  OF  POPULATION  UPON 

THE   DISTRIBUTION   OF   WEALTH. 
CHAPTER  III. — EFFECT     OF     IMPROVEMENTS    IN  THE    ARTS 

UPON  THE  DISTRIBUTION  OF  WEALTH. 
CHAPTER    IV. — EFFECT  OF  THE    EXPECTATION    RAISED  BY 

MATERIAL  PROGRESS. 


Hitherto,  it  is  questionable  if  all  the  mechanical  inventions  yet 
made  have  lightened  the  day's  toil  of  any  human  being. — John 
Stuart  Mill. 


Do  ye  hear  the  children  weeping,  O  my  brothers. 

Ere  the  sorrow  comes  with  years? 
They  are  leaning  their  young  heads  against  their  mothers, 

And  that  cannot  stop  their  tears. 
The  young  lambs  are  bleating  in  the  meadows; 

The  young  birds  are  chirping  in  the  nest; 
The  young  fawns  are  playing  with  the  shadows; 

The  young  flowers  are  blowing  toward  the  west — 
But  the  young,  young  children,  O,  my  brothers, 

They  are  weeping  bitterly! 
They  are  weeping  in  the  playtime  of  the  others, 
In  the  country  of  the  free. 

— Mrs.  Browning. 


CHAPTER  I. 

THE    DYNAMICS   OF   THE    PROBLEM    YET   TO   SEEK. 

In  identifying  rent  as  the  receiver  of  the  increased  pro- 
duction which  material  progress  gives,  but  which  labor 
fails  to  obtain;  in  seeing  that  the  antagonism  of  interests 
is  not  between  labor  and  capital,  as  is  popularly  believed, 
but  is  in  reality  between  labor  and  capital  on  the  one  side 
and  land  ownership  on  the  other,  we  have  reached  a  con- 
clusion that  has  most  important  practical  bearings.  But 
it  is  not  worth  while  to  dwell  on  them  now,  for  we  have 
not  yet  fully  solved  the  problem  which  was  at  the  outset 
proposed.  To  say  that  wages  remain  low  because  rent 
advances  is  like  saying  that  a  steamboat  moves  because 
its  wheels  turn  around.  The  further  question  is.  What 
causes  rent  to  advance?  What  is  the  force  or  necessity 
that,  as  productive  power  increases,  distributes  a  greater 
and  greater  proportion  of  the  produce  as  rent? 

The  only  cause  pointed  out  by  Eicardo  as  advancing 
rent  is  the  increase  of  population,  which  by  requiring 
larger  supplies  of  food  necessitates  the  extension  of  culti- 
vation to  inferior  lands,  or  to  points  of  inferior  produc- 
sion  on  the  same  lands,  and  in  current  works  of  other 
authors  attention  is  so  exclusively  directed  to  the  exten- 
sion of  production  from  superior  to  inferior  lands  as  the 
cause  of  advancing  rents  that  Mr.  Carey  (followed  by 
Professor  Perry  and  others)  has  imagined  that  he  has 
overthrown  the  Eicardian  theory  of  rent  by  denying  that 
the  progress  of  agriculture  is  from  better  to  worse  lands.* 

*Astothis,  it  may  be  worth  while  to  say:  (1)  That  the  general 
fact,  as  shown  by  the  progress  of  agriculture  in  the  newer  States  of 


226  EFFECTS   OF  MATERIAL   PROGRESS.  Book  IV. 

Now,  while  it  is  unquestionably  true  that  the  increas- 
ing pressure  of  population  which  compels  a  resort  to  in- 
ferior points  of  production  will  raise  rents,  and  does 
raise  rents,  I  do  not  think  that  all  the  deductions  com- 
monly made  from  this  principle  are  valid,  nor  yet  that  it 
fully  accounts  for  the  increase  of  rent  as  material  prog- 
ress goes  on.  There  are  evidently  other  causes  which 
conspire  to  raise  rent,  but  which  seem  to  have  been 
wholly  or  partially  hidden  by  the  erroneous  views  as  to 
the  functions  of  capital  and  genesis  of  wages  which  have 
been  current.  To  see  what  these  are,  and  how  they 
operate,  let  us  trace  the  effect  of  material  progress  upon 
the  distribution  of  wealth. 

The  changes  which  constitute  or  contribute  to  material 
progress  are  three:  (1)  increase  in  population;  (2)  im- 
provements in  the  arts  of  production  and  exchange;  and 
(3)  improvements  in  knowledge,  education,  government, 
police,  manners,  and  morals,  so  far  as  they  increase  the 
power  of  producing  wealth.  Material  progress,  as  com- 
monly understood,  consists  of  these  three  elements  or 
directions  of  progression,  in  all  of  which  the  progressive 
nations  have  for  some  time  past  been  advancing,  though 
in  different  degrees.     As,  considered  in  the  light  of  ma- 

the  Union  and  by  the  character  of  the  land  left  out  of  cultivation  in 
the  older,  is  that  the  course  of  cultivation  is  from  the  better  to  the 
worse  qualities  of  land.  (2)  That,  whether  the  course  of  production 
be  from  the  absolutely  better  to  the  absolutely  worse  lands  or  the 
reverse  (and  there  is  much  to  indicate  that  better  or  worse  in  this 
connection  merely  relates  to  our  knowledge,  and  that  future  advances 
may  discover  compensating  qualities  in  portions  of  the  earth  now 
esteemed  most  sterile),  it  is  always,  and  from  the  nature  of  the  human 
mind,  must  always  tend  to  be,  from  land  under  existing  conditions 
deemed  better,  to  land  under  existing  conditions  deemed  worse.  (3) 
That  Ricardo's  law  of  rent  does  not  depend  upon  the  direction  of  the 
extension  of  cultivation,  but  upon  the  proposition  that  if  land  of  a 
certain  quality  will  yield  something,  land  of  a  better  quality  will 
yield  more. 


Chap.  I.        DYNAMICS   OF  THE   PROBLEM  YET  TO  SEEK.      227 

terial  forces  or  economies,  the  increase  of  knowledge,  the 
betterment  of  government,  etc.,  have  the  same  effect  as 
improvements  in  the  arts,  it  will  not  be  necessary  in  this 
view  to  consider  them  separately.  What  bearing  intel- 
lectual or  moral  progress,  merely  as  such,  has  upon  our 
problem  we  may  hereafter  consider.  We  are  at  present 
dealing  with  material  progress,  to  which  these  things 
contribute  only  as  they  increase  wealth-producing  power, 
and  shall  see  their  effects  when  we  see  the  effect  of 
improvements  in  the  arts. 

To  ascertain  the  effects  of  material  progress  upon  the 
distribution  of  wealth,  let  us,  therefore,  consider  the 
effects  of  increase  of  population  apart  from  improvement 
in  the  arts,  and  then  the  effect  of  improvement  in  the 
arts  apart  from  increase  of  population. 


CHAPTEE  II. 

THE   EFFECT    OF     IlfCREASE     OF     POPULATION     UPON    THE 
DISTRIBUTION  OF   WEALTH. 

The  maimer  in  which  increasing  population  advances 
rent,  as  explained  and  illustrated  in  current  treatises,  is 
that  the  increased  demand  for  subsistence  forces  pro- 
duction to  inferior  soil  or  to  inferior  productive  points. 
Thus,  if,  with  a  given  population,  the  margin  of  cultiva- 
tion is  at  30,  all  lands  of  productive  power  over  30  will 
pay  rent.  If  the  population  be  doubled,  an  additional 
supply  is  required,  Avhich  cannot  be  obtained  without  an 
extension  of  cultivation  that  will  cause  lands  to  yield 
rent  that  before  yielded  none.  If  the  extension  be  to  20, 
then  all  the  land  between  20  and  30  will  yield  rent  and 
have  a  value,  and  all  land  over  30  will  yield  increased 
rent  and  have  increased  value. 

It  is  here  that  the  Malthusian  doctrine  receives  from 
the  current  elucidations  of  the  theory  of  rent  the  sup- 
port of  which  I  spoke  when  enumerating  the  causes  that 
have  combined  to  give  that  doctrine  an  almost  undis- 
puted sway  in  current  thought.  According  to  the  Mal- 
thusian theory,  the  pressure  of  population  against  sub- 
sistence becomes  progressively  harder  as  population 
increases,  and  although  two  hands  come  into  the  world 
with  every  new  mouth,  it  becomes,  to  use  the  language 
of  John  Stuart  Mill,  harder  and  harder  for  the  new 
hands  to  supply  the  new  mouths.  According  to  Kicardo's 
theory  of  rent,  rent  arises  from  the  diiference  in  produc- 
tiveness of  the  lands  in  use,  and  as  explained  by  Ricardo 
and  the  economists  who  have  followed  him,  the  advance 


Chap.  II.  INCREASE   OF   POPULATION".  229 

in  rents  which,  experience  shows,  accompanies  increasing 
population,  is  caused  by  the  inability  of  procuring  more 
food  except  at  a  greater  cost,  which  thus  forces  the  mar- 
gin of  population  to  lower  and  lower  points  of  produc- 
tion, commensurately  increasing  rent.  Thus  the  two 
theories,  as  I  have  before  explained,  are  made  to  har- 
monize and  blend,  the  law  of  rent  becoming  but  a  special 
application  of  the  more  general  law  propounded  by  Mal- 
thus,  and  the  advance  of  rents  with  increasing  popula- 
tion a  demonstration  of  its  resistless  operation.  I  refer 
to  this  incidentally,  because  it  now  lies  in  our  way  to  see 
the  misapprehension  which  has  enlisted  the  doctrine  of 
rent  in  the  support  of  a  theory  to  which  it  in  reality 
gives  no  countenance.  The  Malthusian  theory  has  been 
already  disposed  of,  and  the  cumulative  disproof  which 
will  prevent  the  recurrence  of  a  lingering  doubt  will  be 
given  when  it  is  shown,  further  on,  that  the  phenomena 
attributed  to  the  pressure  of  population  against  subsist- 
ence would,  under  existing  conditions,  manifest  them- 
selves were  population  to  remain  stationary. 

The  misapprehension  to  which  I  now  refer,  and  which, 
to  a  proper  understanding  of  the  effect  of  increase  of 
population  upon  the  distribution  of  wealth,  it  is  neces- 
sary to  clear  up,  is  the  presumption,  expressed  or  implied 
in  all  the  current  reasoning  upon  the  subject  of  rent  in 
connection  with  population,  that  the  recourse  to  lower 
points  of  production  involves  a  smaller  aggregate  produce 
in  proportion  to  the  labor  expended;  though  that  this  is 
not  always  the  case  is  clearly  recognized  in  connection 
with  agricultural  improvements,  which,  to  use  the  words 
of  Mill,  are  considered  "as  a  partial  relaxation  of  the 
bonds  which  confine  the  increase  of  population."  But  it 
is  not  involved  even  where  there  is  no  advance  in  the 
arts,  and  the  recourse  to  lower  points  of  production  is 
clearly  the  result  of  the  increased  demand  of  an  increased 
population.     For  increased   population,   of    itself,    and 


230  EFFECTS   OF  MATERIAL   PROGRESS.  Book  IV. 

without  any  advance  in  the  arts,  implies  an  increase  in 
the  productive  power  of  labor.     The  labor  of  100  men, 
other  things  being  equal,  will  produce  much  more  than 
one  hundred  times  as  much  as  the  labor  of  one  man,  and 
the  labor  of  1,000  men  much  more  than  ten  times  as 
much  as  the  labor  of  100  men;  and,  so,  with  every  addi- 
tional pair  of  hands  which  increasing  poi^ulation  brings, 
there  is  a  more  than  proportionate  addition  to  the  pro- 
ductive power  of  labor.     Thus,  with  an  increasing  popu- 
lation, there  may  be  a  recourse  to  lower  natural  powers 
of  production,  not  only  without  any  diminution  in  the 
average  production  of  wealth  as  compared  to  labor,  but 
without  any  diminution  at  the  lowest  point.     If  popu- 
lation be  doubled,  land  of  but  20  productiveness  may 
yield   to  the  same   amount  of  labor  as  much    as   land 
of  30  productiveness  could  before  yield.     For  it  must 
not    be   forgotten   (what    often   is   forgotten)  that  the 
productiveness  either  of  land  or  labor  is  not  to  be  meas- 
ured  in  any  one   thing,  but  in   all   desired   things.     A 
settler  and  his  family  may  raise  as  much   corn   on  land 
a  hundred    miles    away   from    the    nearest    habitation 
as  they  could  raise  were   their  land  in  the  center  of  a 
populous  district.     But  in  the  populous   district  they 
could  obtain  with  the  same  labor  as  good  a  living  from 
much   poorer  land,  or  from  land  of  equal  quality  could 
make  as  good  a  living  after  paying  a  high  rent,  because 
in  the  midst  of  a  large  population  their  labor  would  have 
become  more  effective;  not,  perhaps,  in  the  production 
of  corn,  but  in  the  production  of  wealth  generally — or 
the  obtaining  of  all  the  commodities  and  services  which 
are  the  real  object  of  their  labor. 

But  even  where  there  is  a  diminution  in  the  produc- 
tiveness of  labor  at  the  lowest  point — that  is  to  say, 
where  the  increasing  demand  for  wealth  has  driven  pro- 
duction to  a  lower  point  of  natural  productiveness  than 
the  addition  to  the  power  of  labor  from  increasing  popu- 


Chap.  11.  INCREASE   OF  POPULATION".  231 

lation  suflBces  to  make  up  for — it  does  not  follow  that  the 
aggregate  production,  as  compared  with  the  aggregate 
labor,  has  been  lessened. 

Let  us  suppose  land  of  diminishing  qualities.  The  best 
would  naturally  be  settled  first,  and  as  population  in- 
creased production  would  take  in  the  next  lower  quality, 
and  so  on.  But,  as  the  increase  of  population,  by  per- 
mitting greater  economies,  adds  to  the  effectiveness  of 
labor,  the  cause  which  brought  each  quality  of  land  suc- 
cessively into  cultivation  would  at  the  same  time  increase 
the  amount  of  wealth  that  the  same  quality  of  labor 
could  produce  from  it.  But  it  would  also  do  more  than 
this — it  would  increase  the  power  of  producing  wealth 
on  all  the  superior  lands  already  in  cultivation.  If  the 
relations  of  quantity  and  quality  were  such  that  increas- 
ing population  added  to  the  effectiveness  of  labor  faster 
than  it  compelled  a  resort  to  less  productive  qualities  of 
land,  though  the  margin  of  cultivation  would  fall  and 
rent  would  rise,  the  minimum  return  to  labor  would  in- 
crease. That  is  to  say,  though  wages  as  a  proportion 
would  fall,  wages  as  a  quantity  would  rise.  The  average 
production  of  wealth  would  increase.  If  the  relations 
were  such  that  the  increasing  effectiveness  of  labor  just 
compensated  for  the  diminishing  productiveness  of  the 
land  as  it  was  called  into  use,  the  effect  of  increasing 
population  would  be  to  increase  rent  by  lowering  the 
margin  of  cultivation  without  reducing  wages  as  a 
quantity,  and  to  increase  the  average  production.  If  we 
now  suppose  population  still  increasing,  but,  between 
the  poorest  quality  of  land  in  use  and  the  next  lower 
quality,  to  be  a  difference  so  great  that  the  increased 
power  of  labor  which  comes  with  the  increased  popula- 
tion that  brings  it  into  cultivation  cannot  compensate 
for  it — the  minimum  return  to  labor  will  be  reduced,  and 
with  the  rise  of  rents,  wages  will  fall,  not  only  as  a  pro- 
portion, but  as  a  quantity.     But  unless  the  descent  in 


232  EFFECTS  OF  MATERIAL   PROGRESS.  Book  IV. 

the  quality  of  land  is  far  more  precipitous  than  we  can 
well  imagine,  or  than,  I  think,  ever  exists,  the  average 
production  will  still  be  increased,  for  the  increased  effect- 
iveness which  comes  by  reason  of  the  increased  popula- 
tion that  compels  resort  to  the  inferior  quality  of  land 
attaches  to  all  labor,  and  the  gain  on  the  superior  quali- 
ties of  land  will  more  than  compensate  for  the  diminished 
production  on  the  quality  last  brought  in.  The  aggre- 
gate wealth  production,  as  compared  with  the  aggregate 
expenditure  of  labor,  will  be  greater,  though  its  distribu- 
tion will  be  more  unequal. 

Thus,  increase  of  population,  as  it  operates  to  extend 
production  to  lower  natural  levels,  operates  to  increase 
rent  and  reduce  wages  as  a  proportion,  and  may  or  may 
not  reduce  wages  as  a  quantity;  while  it  seldom  can,  and 
probably  never  does,  reduce  the  aggregate  production  of 
wealth  as  compared  with  the  aggregate  expenditure  of 
labor,  but  on  the  contrary  increases,  and  frequently 
largely  increases  it. 

But  while  the  increase  of  population  thus  increases 
rent  by  lowering  the  margin  of  cultivation,  it  is  a  mis- 
take to  look  upon  this  as  the  only  mode  by  which  rent 
advances  as  population  grows.  Increasing  population 
increases  rent,  without  reducing  the  margin  of  cultiva- 
tion; and  notwithstanding  the  dicta  of  such  writers  as 
McCulloch,  who  assert  that  rent  would  not  arise  were 
there  an  unbounded  extent  of  equally  good  land,  in- 
creases it  without  reference  to  the  natural  qualities  of 
land,  for  the  increased  powers  of  co-operation  and  ex- 
change which  come  with  increased  population  are 
equivalent  to — nay,  I  think  we  can  say  without  meta- 
phor, that  they  give — an  increased  capacity  to  land. 

I  do  not  mean  to  say  merely  that,  like  an  improvement 
in  the  methods  or  tools  of  production,  the  increased 
power  which  comes  with  increased  population  gives  to 
the  same  labor  an  increased  result,  which  is  equivalent 


Chap.U.  INCREASE  OF  POPULATION".  233 

to  an  increase  in  the  natural  powers  of  land;  but  that 
it  brings  out  a  superior  power  in  labor,  which  is  localized 
on  land — which  attaches  not  to  labor  generally,  but  only 
to  labor  exerted  on  particular  land;  and  which  thus  in- 
heres in  the  land  as  much  as  any  qualities  of  soil,  climate, 
mineral  deposit,  or  natural  situation,  and  passes,  as  they 
do,  with  the  possession  of  the  land. 

An  improvement  in  the  method  of  cultivation  which, 
with  the  same  outlay,  will  give  two  crops  a  year  in  place 
of  one,  or  an  improvement  in  tools  and  machinery  which 
will  double  the  result  of  labor,  will  manifestly,  on  a  par- 
ticular piece  of  ground,  have  the  same  effect  on  the  prod- 
uce as  a  doubling  of  the  fertility  of  the  land.  But  the 
difference  is  in  this  respect — the  improvement  in  method 
or  in  tools  can  be  utilized  on  any  laud;  but  the  improve- 
ment in  fertility  can  be  utilized  only  on  the  particular 
land  to  which  it  applies.  Now,  in  large  part,  the  in- 
creased productiveness  of  labor  which  arises  from  in- 
creased population  can  be  utilized  only  on  particular 
land,  and  on  particular  land  in  greatly  varying  degrees. 

Here,  let  us  imagine,  is  an  unbounded  savannah, 
stretching  off  in  unbroken  sameness  of  grass  and  flower, 
tree  and  rill,  till  the  traveler  tires  of  the  monotony. 
Along  comes  the  wagon  of  the  first  immigrant.  Where 
to  settle  he  cannot  tell — every  acre  seems  as  good  as 
every  other  acre.  As  to  wood,  as  to  water,  as  to  fertil- 
ity, as  to  situation,  there  is  absolutely  no  choice,  and  he 
is  perplexed  by  the  embarrassment  of  richness.  Tired 
out  with  the  search  for  one  place  that  is  better  than 
another,  he  stops — somewhere,  anywhere — and  starts  to 
make  himself  a  home.  The  soil  is  virgin  and  rich,  game 
is  abundant,  the  streams  flash  with  the  finest  trout. 
Nature  is  at  her  very  best.  He  has  what,  were  he  in  a 
populous  district,  would  make  him  rich;  but  he  is  very 
poor.  To  say  nothing  of  the  mental  craving,  which 
would   lead   him  to  welcome  the  sorriest   stranger,  he 


234  EFFECTS   OF  MATERIAL   PROGRESS.  Book  IV. 

labors  under  all  the  material  disadvantages  of  solitude. 
He  can  get  no  temporary  assistance  for  any  work  that 
requires  a  greater  union  of  strength  than  that  afforded 
by  his  own  family,  or  by  such  help  as  he  can  permanently 
keep.  Though  he  has  cattle,  he  cannot  often  have  fresh 
meat,  for  to  get  a  beefsteak  he  must  kill  a  bullock.  He 
must  be  his  own  blacksmith,  wagonmaker,  carpenter,  and 
cobbler — in  short,  a  "jack  of  all  trades  and  master  of 
none."  He  cannot  have  his  children  schooled,  for,  to 
do  so,  he  must  himself  pay  and  maintain  a  teacher. 
Such  things  as  he  cannot  produce  himself,  he  must  buy 
in  quantities  and  keep  on  hand,  or  else  go  without,  for 
he  cannot  be  constantly  leaving  his  work  and  making  a 
long  journey  to  the  verge  of  civilization;  and  when 
forced  to  do  so,  the  getting  of  a  vial  of  medicine  or  the 
replacement  of  a  broken  auger  may  cost  him  the  labor  of 
himself  and  horses  for  days.  Under  such  circumstances, 
though  nature  is  prolific,  the  man  is  poor.  It  is  an  easy 
matter  for  him  to  get  enough  to  eat;  but  beyond  this, 
his  labor  will  suflQce  to  satisfy  only  the  simplest  wants  in 
the  rudest  way. 

Soon  there  comes  another  immigrant.  Although 
every  quarter  section  of  the  boundless  plain  is  as  good 
as  every  other  quarter  section,  he  is  not  beset  by  any 
embarrassment  as  to  where  to  settle.  Though  the  land 
is  the  same,  there  is  one  place  that  is  clearly  better  for 
him  than  any  other  place,  and  that  is  where  there  is 
already  a  settler  and  he  may  have  a  neighbor.  He  set- 
tles by  the  side  of  the  first  comer,  whose  condition  is  at 
once  greatly  improved,  and  to  whom  many  things  are 
now  possible  that  were  before  impossible,  for  two  men 
may  help  each  other  to  do  things  that  one  man  could 
never  do. 

Another  immigrant  comes,  and,  guided  by  the  same 
attraction,  settles  where  there  are  already  two.  Another, 
and  another,  until  around  our  first  comer  there  are  a 


Chap.  n.  INCEEASE   OF   POPULATION.  235 

score  of  neighbors.  Labor  has  now  an  effectiveness 
which,  in  the  solitary  state,  it  could  not  approach.  If 
heavy  work  is  to  be  done,  the  settlers  have  a  log-rolling, 
and  together  accomplish  in  a  day  what  singly  would  re- 
quire years.  When  one  kills  a  bullock,  the  others  take 
part  of  it,  returning  when  they  kill,  and  thus  they  have 
fresh  meat  all  the  time.  Together  they  hire  a  school- 
master, and  the  children  of  each  are  taught  for  a  frac- 
tional part  of  what  similar  teaching  would  have  cost  the 
first  settler.  It  becomes  a  comparatively  easy  matter  to 
send  to  the  nearest  town,  for  some  one  is  always  going. 
But  there  is  less  need  for  such  journeys.  A  blacksmith 
and  a  wheelwright  soon  set  up  shops,  and  our  settler  can 
have  his  tools  repaired  for  a  small  part  of  the  labor  it 
formerly  cost  him.  A  store  is  opened  and  he  can  get 
what  he  wants  as  he  wants  it;  a  post-office,  soon  added, 
gives  him  regular  communication  with  the  rest  of  the 
world.  Then  come  a  cobbler,  a  carpenter,  a  harness- 
maker,  a  doctor;  and  a  little  church  soon  arises.  Satis- 
factions become  possible  that  in  the  solitary  state  were 
impossible.  There  are  gratifications  for  the  social  and 
the  intellectual  nature — for  that  part  of  the  man  that 
rises  above  the  animal.  The  power  of  sympathy,  the 
sense  of  companionship,  the  emulation  of  comparison  and 
contrast,  open  a  wider,  and  fuller,  and  more  varied  life. 
In  rejoicing,  there  are  others  to  rejoice;  in  sorrow,  the 
mourners  do  not  mourn  alone.  There  are  husking  bees, 
and  apple  parings,  and  quilting  parties.  Though  the 
ballroom  be  unplastered  and  the  orchestra  but  a  fiddle, 
the  notes  of  the  magician  are  yet  in  the  strain,  and 
Cupid  dances  with  the  dancers.  At  the  wedding,  there 
are  others  to  admire  and  enjoy;  in  the  house  of  death, 
there  are  watchers;  by  the  open  grave,  stands  human 
sympathy  to  sustain  the  mourners.  Occasionally,  comes 
a  straggling  lecturer  to  open  up  glimpses  of  the  world 
of  science,  of  literature,   or  of  art;  in  election   times. 


236  EFFECTS    OF   MATEEIAL   PROGRESS.  Book  IT. 

come  stump  speakers,  and  the  citizen  rises  to  a  sense  of 
dignity  and  power,  as  the  cause  of  empires  is  tried  before 
him  in  the  struggle  of  John  Doe  and  Eichard  Eoe  for  his 
support  and  vote.  And,  by  and  by,  comes  the  circus, 
talked  of  months  before,  and  opening  to  children  whose 
horizon  has  been  the  prairie,  all  the  realms  of  the  imag' 
ination — princes  and  princesses  of  fairy  tale,  mail-clad 
crusaders  and  turbaned  Moors,  Cinderella's  fairy  coach, 
and  the  giants  of  nursery  lore;  lions  such  as  crouched 
before  Daniel,  or  in  circling  Roman  amphitheater  tore 
the  saints  of  God;  ostriches  who  recall  the  sandy  deserts; 
camels  such  as  stood  around  when  the  wicked  brethren 
raised  Joseph  from  the  well  and  sold  him  into  bondage; 
elephants  such  as  crossed  the  Alps  with  Hannibal,  or  felt 
the  sword  of  the  Maccabees;  and  glorious  music  that 
thrills  and  builds  in  the  chambers  of  the  mind  as  rose 
the  sunny  dome  of  Kubla  Khan. 

Go  to  our  settler  now,  and  say  to  him:  "You  have  so 
many  fruit  trees  which  you  planted;  so  much  fencing, 
such  a  well,  a  barn,  a  house — in  short,  you  have  by  your 
labor  added  so  much  value  to  this  farm.  Your  land 
itself  is  not  quite  so  good.  You  have  been  cropping  it, 
and  by  and  by  it  will  need  manure.  I  will  give  you  the 
full  value  of  all  your  improvements  if  you  will  give  it  to 
me,  and  go  again  with  your  family  beyond  the  verge  of 
settlement."  He  would  laugh  at  you.  His  land  yields 
no  more  wheat  or  potatoes  than  before,  but  it  does  yield 
far  more  of  all  the  necessaries  and  comforts  of  life.  His 
labor  upon  it  will  bring  no  heavier  crops,  and,  we  will 
suppose,  no  more  valuable  crops,  but  it  will  bring  far 
more  of  all  the  other  things  for  which  men  work.  The 
presence  of  other  settlers — the  increase  of  population — 
has  added  to  the  productiveness,  in  these  things,  of  labor 
bestowed  upon  it,  and  this  added  productiveness  gives  it 
a  superiority  over  land  of  equal  natural  quality  whe-re 
there  are  as  yet  no  settlers.     If  no  land  remains  to  be 


Chap.n.  IKCREASE  OF  POPULATION.  237 

taken  up,  except  such  as  is  as  far  removed  from  popula- 
tion as  was  our  settler's  land  when  he  first  went  upon  it, 
the  value  or  rent  of  this  land  will  be  measured  by  the 
whole  of  this  added  capability.  If,  however,  as  we  have 
supposed,  there  is  a  continuous  stretch  of  equal  land,  over 
which  population  is  now  spreading,  it  will  not  be  neces- 
sary for  the  new  settler  to  go  into  the  wilderness,  as  did 
the  first.  He  will  settle  just  beyond  the  other  settlers, 
and  will  get  the  advantage  of  proximity  to  them.  The 
value  or  rent  of  our  settler's  land  will  thus  depend  on  the 
advantage  which  it  has,  from  being  at  the  center  of 
population,  over  that  on  the  verge.  In  the  one  case,  the 
margin  of  production  will  remain  as  before;  in  the  other, 
the  margin  of  production  will  be  raised. 

Population  still  continues  to  increase,  and  as  it  in- 
creases so  do  the  economies  which  its  increase  permits, 
and  which  in  effect  add  to  the  productiveness  of  the  land. 
Our  first  settler's  land,  being  the  center  of  population, 
the  store,  the  blacksmith's  forge,  the  wheelwright's  shop, 
are  set  up  on  it,  or  on  its  margin,  where  soon  arises  a 
village,  which  rapidly  grows  into  a  town,  the  center  of 
exchanges  for  the  people  of  the  whole  district.  With  no 
greater  agricultural  productiveness  than  it  had  at  first, 
this  land  now  begins  to  develop  a  productiveness  of  a 
higher  kind.  To  labor  expended  in  raising  corn,  or 
wheat,  or  potatoes,  it  will  yield  no  more  of  those  things 
than  at  first;  but  to  labor  expended  in  the  subdivided 
branches  of  production  which  require  proximity  to  other 
producers,  and,  especially,  to  labor  expended  in  that 
final  part  of  production,  which  consists  in  distribution, 
it  will  yield  much  larger  returns.  The  wheat-grower 
may  go  further  on,  and  find  land  on  which  his  labor  will 
produce  as  much  wheat,  and  nearly  as  much  wealth;  but 
the  artisan,  the  manufacturer,  the  storekeeper,  tlie  pro- 
fessional man,  find  that  their  labor  expended  here,  at  the 
center  of  exchanges,  will  yield  them  much  more  than  if 


238  EFFECTS    OF    MATERIAL   PROGRESS.  Book  IV. 

expended  even  at  a  little  distance  away  from  it;  and  this 
excess  of  productiveness  for  such  purposes  the  land- 
owner can  claim  just  as  he  could  an  excess  in  its  wheat- 
producing  power.  And  so  our  settler  is  able  to  sell  in 
building  lots  a  few  of  his  acres  for  prices  which  it  would 
not  bring  for  wheat-growing  if  its  fertility  had  been  mul- 
tiplied many  times.  With  the  proceeds,  he  builds  him- 
self a  fine  house,  and  furnishes  it  handsomely.  That  is 
to  say,  to  reduce  the  transaction  to  its  lowest  terms,  the 
people  who  wish  to  use  the  land  build  and  furnish  the 
house  for  him,  on  condition  that  he  will  let  them  avail 
themselves  of  the  superior  productiveness  which  the  in- 
crease of  population  has  given  the  land. 

Population  still  keeps  on  increasing,  giving  greater 
and  greater  utility  to  the  land,  and  more  and  more  wealth 
to  its  owner.  The  town  has  grown  into  a  city — a  St. 
Louis,  a  Chicago  or  a  San  Francisco — and  still  it  grows. 
Production  is  here  carried  on  upon  a  great  scale,  with 
the  best  machinery  and  the  most  favorable  facilities;  the 
division  of  labor  becomes  extremely  minute,  wonderfully 
multiplying  efficiency;  exchanges  are  of  such  volume  and 
rapidity  that  they  are  made  with  the  minimum  of  friction 
and  loss.  Here  is  the  heart,  the  brain,  of  the  vast  social 
organism  that  has  grown  up  from  the  germ  of  the  first 
settlement;  here  has  developed  one  of  the  great  gan- 
glions of  the  human  world.  Hither  run  all  roads,  hither 
set  all  currents,  through  all  the  vast  regions  round 
about.  Here,  if  you  have  anything  to  sell,  is  the 
market;  here,  if  you  have  anything  to  buy,  is  the  largest 
and  the  choicest  stock.  Here  intellectual  activity  is 
gathered  into  a  focus,  and  here  springs  that  stimulus 
which  is  born  of  the  collision  of  mind  with  mind.  Here 
are  the  great  libraries,  the  storehouses  and  granaries  of 
knowledge,  the  learned  professors,  the  famous  special- 
ists. Here  are  museums  and  art  galleries,  collections  of 
philosophical  apparatus,  and  all  things  rare,  and  valuable. 


Chap.  11.  INCREASE    OF    POPULATION.  239 

and  best  of  tlieir  kind.  Here  come  great  actors,  and 
orators,  and  singers,  from  all  over  the  world.  Here,  in 
short,  is  a  center  of  human  life,  in  all  its  varied  mani- 
festations. 

So  enormous  are  the  advantages  which  this  land  now 
offers  for  the  application  of  labor  that  instead  of  one 
man  with  a  span  of  horses  scratching  over  acres,  you  may 
count  in  places  thousands  of  workers  to  the  acre,  work- 
ing tier  on  tier,  on  floors  raised  one  above  the  other,  five, 
six,  seven  and  eight  stories  from  the  ground,  while  un- 
derneath the  surface  of  the  earth  engines  are  throbbing 
with  pulsations  that  exert  the  force  of  thousands  of 
horses. 

All  these  advantages  attach  to  the  land;  it  is  on  this 
land  and  no  other  that  they  can  be  utilized,  for  here  is 
the  center  of  population — the  focus  of  exchanges,  the 
market  place  and  workshop  of  the  highest  forms  of  in- 
dustry. The  productive  powers  which  density  of  popu- 
lation has  attached  to  this  land  are  equivalent  to  the 
multiplication  of  its  original  fertility  by  the  hundred  fold 
and  the  thousand  fold.  And  rent,  which  measures  the 
difference  betAveen  this  added  productiveness  and  that  of 
the  least  productive  land  in  use,  has  increased  accord- 
ingly. Our  settler,  or  whoever  has  succeeded  to  his 
right  to  the  land,  is  now  a  millionaire.  Like  another 
Kip  Van  Winkle,  he  may  have  lain  down  and  slept;  still 
he  is  rich — not  from  anything  he  has  done,  but  from  the 
increase  of  population.  There  are  lots  from  which  for 
every  foot  of  frontage  the  owner  may  draw  more  than  an 
average  mechanic  can  earn;  there  are  lots  that  will  sell 
for  more  than  Avould  suffice  to  pave  them  with  gold  coin. 
In  the  principal  streets  are  towering  buildings,  of 
granite,  marble,  iron,  and  plate  glass,  finished  in  the 
most  expensive  style,  replete  with  every  convenience. 
Yet  they  are  not  worth  as  much  as  the  land  upon  which 
they  rest — the  same  land,  in  nothing  changed,  which 
when  our  first  settler  came  u})on  it  had  no  value  at  all. 


240  EFFECTS   OF   MATERIAL  PROGEESS.  Book  IV. 

That  this  is  the  way  in  which  the  increase  of  popula- 
tion powerfully  acts  in  increasing  rent,  whoever,  in  a 
progressive  country,  will  look  around  him,  may  see  for 
himself.  The  process  is  going  on  under  his  eyes.  The 
increasing  difference  in  the  productiveness  of  the  land  in 
use,  which  causes  an  increasing  rise  in  rent,  results  not 
so  much  from  the  necessities  of  increased  population 
compelling  the  resort  to  inferior  land,  as  from  the  in- 
creased productiveness  which  increased  population  gives 
to  the  lands  already  in  use.  The  most  valuable  lands  on 
the  globe,  the  lands  which  yield  the  highest  rent,  are  not 
lands  of  surpassing  natural  fertility,  but  lands  to  which 
a  surpassing  utility  has  been  given  by  the  increase  of 
population. 

The  increase  of  productiveness  or  utility  which  in- 
crease of  population  gives  to  certain  lands,  in  the  way  to 
which  I  have  been  calling  attention,  attaches,  as  it  were, 
to  the  mere  quality  of  extension.  The  valuable  quality 
of  land  that  has  become  a  center  of  population  is  its 
superficial  capacity — it  makes  no  difference  whether  it  is 
fertile,  alluvial  soil  like  that  of  Philadelphia;  rich  bottom 
laud  like  that  of  New  Orleans;  a  filled-in  marsh  like  that 
of  St.  Petersburg,  or  a  sandy  waste  like  the  greater  part 
of  San  Francisco. 

And  where  value  seems  to  arise  from  superior  natural 
qualities,  such  as  deep  water  and  good  anchorage,  rich 
deposits  of  coal  and  iron,  or  heavy  timber,  observation 
also  shows  that  these  superior  qualities  are  brought  out, 
rendered  tangible,  by  population.  The  coal  and  iron 
fields  of  Pennsylvania,  that  to-day  are  worth  enormous 
sums,  were  fifty  years  ago  valueless.  What  is  the  efficient 
cause  of  the  difference?  Simply  the  difference  in  popu- 
lation. The  coal  and  iron  beds  of  Wyoming  and  Mon- 
tana, which  to-day  are  valueless,  will,  in  fifty  years  from 
now,  be  worth  millions  on  millions,  simply  because,  in 
the  meantime,  population  will  have  greatly  increased. 


Chap.  II.  INCREASE   OF    POPULATION".  241 

It  is  a  well  provisioned  sliip,  this  on  which  we  sail 
through  space.  If  the  bread  and  beef  above  decks  seem 
to  grow  scarce,  we  but  open  a  hatch  and  there  is  a  new 
supply,  of  which  before  we  never  dreamed.  And  very 
great  command  over  the  services  of  others  comes  to 
those  who  as  the  hatches  are  opened  are  permitted  to 
say,  "This  is  mine!" 

To  recapitulate:  The  effect  of  increasing  population 
upon  the  distribution  of  wealth  is  to  increase  rent,  and 
consequently  to  diminish  the  proportion  of  the  produce 
which  goes  to  capital  and  labor,  in  two  ways:  First,  By 
lowering  the  margin  of  cultivation.  Second,  By  bring- 
ing out  in  land  special  capabilities  otherwise  latent,  and 
by  attaching  special  capabilities  to  particular  lands. 

I  am  disposed  to  think  that  the  latter  mode,  to  which 
little  attention  has  been  given  by  political  economists,  is 
really  the  more  important.  But  this,  in  our  inquiry,  is 
not  a  matter  of  moment. 


CHAPTER  III. 

THE   EFFECT   OF    IMPKOVEMENTS  IS  THE   ARTS  UPON"  THE 
DISTRIBUTION    OF   WEALTH. 

Eliminating  improvements  in  the  arts,  we  have  seen 
the  effects  of  increase  of  population  upon  the  distribution 
of  wealth.  Eliminating  increase  of  population,  let  us 
now  see  what  effect  improvements  in  the  arts  of  produc- 
tion have  upon  distribution. 

We  have  seen  that  increase  of  population  increases 
rent,  rather  by  increasing  the  productiveness  of  labor 
than  by  decreasing  it.  If  it  can  now  be  shoAvn  that,  irre- 
spective of  the  increase  of  population,  the  effect  of  im- 
provements in  methods  of  production  and  exchange  is  to 
increase  rent,  the  disproof  of  the  Malthusian  theory — 
and  of  all  the  doctrines  derived  from  or  related  to  it — 
will  be  final  and  complete,  for  we  shall  have  accounted 
for  the  tendency  of  material  progress  to  lower  wages  and 
depress  the  condition  of  the  lowest  class,  without  re- 
course to  the  theory  of  increasing  pressure  against  the 
means  of  subsistence. 

That  this  is  the  case  will,  I  think,  appear  on  the 
slightest  consideration. 

The  effect  of  inventions  and  improvements  in  the  pro- 
ductive arts  is  to  save  labor — that  is,  to  enable  the  same 
result  to  be  secured  with  less  labor,  or  a  greater  result 
with  the  same  labor. 

Now,  in  a  state  of  society  in  which  the  existing  power 
of  labor  served  to  satisfy  all  material  desires,  and  there 
was  no  possibility  of  new  desires  being  called  forth  by 
the  opportunity  of  gratifying  them,  the  effect  of  labor- 


Chap.  III.  IMPROVEMENTS   IN    THE    ARTS.  243 

saving  improvements  would  be  simply  to  reduce  the 
amount  of  labor  expended.  But  such  a  state  of  society, 
if  it  can  anywhere  be  found,  which  I  do  not  believe, 
exists  only  where  the  human  most  nearly  approaches 
the  animal.  In  the  state  of  society  called  civilized,  and 
which  in  this  inquiry  we  are  concerned  with,  the  very 
reverse  is  the  case.  Demand  is  not  a  fixed  quantity, 
that  increases  only  as  population  increases.  In  each  in- 
dividual it  rises  with  his  power  of  getting  the  things  de- 
manded. Man  is  not  an  ox,  who,  when  he  has  eaten  his 
fill;  lies  down  to  chew  the  cud;  he  is  the  daughter  of  the 
horse  leech,  who  constantly  asks  for  more.  "When  I  get 
some  money,"  said  Erasmus,  "I  will  buy  me  some  Greek 
books  and  afterward  some  clothes."  The  amount  of 
wealth  produced  is  nowhere  commensurate  with  the 
desire  for  wealth,  and  desire  mounts  with  every  addi- 
tional opportunity  for  gratification. 

This  being  the  case,  the  effect  of  labor-saving  improve- 
ments will  be  to  increase  the  production  of  wealth.  Now, 
for  the  production  of  wealth,  two  things  are  required — 
labor  and  land.  Therefore,  the  effect  of  labor-saving 
improvements  will  be  to  extend  the  demand  for  land, 
and  wherever  the  limit  of  the  quality  of  land  in  use  is 
reached,  to  bring  into  cultivation  lands  of  less  natural 
productiveness,  or  to  extend  cultivation  on  the  same 
lands  to  a  point  of  lower  natural  productiveness.  And 
thus,  while  the  primary  eifect  of  labor-saving  improve- 
ments is  to  increase  the  power  of  labor,  the  secondary 
effect  is  to  extend  cultivation,  and,  where  this  lowers  the 
margin  of  cultivation,  to  increase  rent.  Thus,  where 
land  is  entirely  appropriated,  as  in  England,  or  where  it 
is  either  appropriated  or  is  capable  of  appropriation  as 
rapidly  as  it  is  needed  for  use,  as  in  the  United  States, 
the  ultimate  effect  of  labor-saving  machinery  or  improve- 
ments is  to  increase  rent  without  increasing  wages  or 
interest. 


244  EFFECTS   OF  MATERIAL   PKOGEESS.  Book  IV. 

It  is  important  that  this  be  fully  understood,  for  it 
shows  that  effects  attributed  by  current  theories  to  in- 
crease of  population  are  really  due  to  the  progress  of  in- 
vention, and  explains  the  otherwise  perplexing  fact  that 
labor-saving  machinery  everywhere  fails  to  benefit 
laborers. 

Yet,  to  grasp  fully  this  truth,  it  is  necessary  to  keep 
in  mind  what  I  have  already  more  than  once  adverted  to 
— the  interchangeability  of  wealth.  I  refer  to  this  again, 
only  because  it  is  so  persistently  forgotten  or  ignored  by 
writers  who  speak  of  agricultural  production  as  though  it 
were  to  be  distinguished  from  production  in  general,  and 
of  food  or  subsistence  as  though  it  were  not  included  in 
the  term  wealth. 

Let  me  ask  the  reader  to  bear  in  mind,  what  has 
already  been  sufficiently  illustrated,  that  the  possession  or 
production  of  any  form  of  wealth  is  virtually  the  posses- 
sion or  production  of  any  other  form  of  wealth  for  which 
it  will  exchange — in  order  that  he  may  clearly  see  that  it 
is  not  merely  improvements  which  effect  a  saving  in 
labor  directly  applied  to  land  that  tend  to  increase  rent, 
but  all  improvements  that  in  any  way  save  labor. 

That  the  labor  of  any  individual  is  applied  exclusively 
to  the  production  of  one  form  of  wealth  is  solely  the 
result  of  the  division  of  labor.  The  object  of  labor  on 
the  part  of  any  individual  is  not  the  obtainment  of 
wealth  in  one  particular  form,  but  the  obtainment  of 
wealth  in  all  the  forms  that  consort  with  his  desires. 
And,  hence,  an  improvement  which  effects  a  saving  in 
the  labor  required  to  produce  one  of  the  things  desired, 
is,  in  effect,  an  increase  in  the  power  of  producing  all 
the  other  things.  If  it  take  half  a  man's  labor  to  keep 
him  in  food,  and  the  other  half  to  provide  him  clothing 
and  shelter,  an  improvement  which  would  increase  his 
power  of  producing  food  would  also  increase  his  power 
of  providing  clothing  and  shelter.     If  his  desires  for 


Chap.m.  IMPROVEMENTS   IN   THE   ARTS.  245 

more  or  better  food,  and  for  more  or  better  clothing  and 
shelter,  were  equal,  an  improvement  in  one  department 
of  labor  would  be  precisely  equivalent  to  a  like  improve- 
ment in  the  other.  If  the  improvement  consisted  in  a 
doubling  of  the  power  of  his  labor  in  producing  food, 
he  would  give  one-third  less  labor  to  the  production  of 
food,  and  one-third-  more  to  the  providing  of  clothing 
and  shelter.  If  the  improvement  doubled  his  power  to 
provide  clothing  and  shelter  he  would  give  one-third  less 
labor  to  the  production  of  these  things,  and  one-third 
more  to  the  production  of  food.  In  either  case,  the 
result  would  be  the  same — he  would  be  enabled  with  the 
same  labor  to  get  one-third  more  in  quantity  or  quality 
of  all  the  things  he  desired. 

And,  so,  where  production  is  carried  on  by  the  division 
of  labor  between  individuals,  an  increase  in  the  power  of 
producing  one  of  the  things  sought  by  production  in  the 
aggregate  adds  to  the  power  of  obtaining  others,  and 
will  increase  the  production  of  the  others,  to  an  extent 
determined  by  the  proportion  which  the  saving  of  labor 
bears  to  the  total  amount  of  labor  expended,  and  by  the 
relative  strength  of  desires.  I  am  unable  to  think  of  any 
form  of  wealth,  the  demand  for  which  would  not  be  in- 
creased by  a  saving  in  the  labor  required  to  produce  the 
others.  Hearses  and  coffins  have  been  selected  as  exam- 
ples of  things  for  which  the  demand  is  little  likely  to 
increase;  but  this  is  true  only  as  to  quantity.  That  in- 
creased power  of  supply  would  lead  to  a  demand  for 
more  expensive  hearses  and  coflB.ns,  no  one  can  doubt 
who  has  noticed  how  strong  is  the  desire  to  show  regard 
for  the  dead  by  costly  funerals. 

Nor  is  the  demand  for  food  limited,  as  in  economic 
reasoning  is  frequently,  but  erroneously,  assumed.  Sub- 
sistence is  often  spoken  of  as  though  it  were  a  fixed 
quantity;  but  it  is  fixed  only  as  having  a  definite 
minimum.     Less  than  a  certain  amount  will  not  keep  a 


246  EFFECTS   OF  MATERIAL  PROGRESS.  Book  IV. 

human  being  alive,  and  less  than  a  somewhat  larger 
amount  will  not  keep  a  human  being  in  good  health. 
But,  above  this  minimum,  the  subsistence  which  a 
human  being  can  use  may  be  increased  almost  indefi- 
nitely. Adam  Smith  says,  and  Eicardo  indorses  the 
statement,  that  the  desire  for  food  is  limited  in  every 
man  by  the  narrow  capacity  of  the  human  stomach;  but 
this,  manifestly,  is  true  only  in  the  sense  that  when  a 
man's  belly  is  filled,  hunger  is  satisfied.  His  demands 
for  food  have  no  such  limit.  The  stomach  of  a  Louis 
XIV.,  a  Louis  XV.,  or  a  Louis  XVL,  could  not  hold  or 
digest  more  than  the  stomach  of  a  French  peasant  of 
equal  stature,  yet,  while  a  few  rods  of  ground  would 
supply  the  black  bread  and  herbs  which  constituted  the 
subsistence  of  the  peasant,  it  took  hundreds  of  thousands 
of  acres  to  supply  the  demands  of  the  king,  who,  besides 
his  own  wasteful  use  of  the  finest  qualities  of  food,  re- 
quired immense  supplies  for  his  servants,  horses  and 
dogs.  And  in  the  common  facts  of  daily  life,  in  the  un- 
satisfied, though  perhaps  latent,  desires  which  each  one 
has,  we  may  see  how  every  increase  in  the  power  of  pro- 
ducing any  form  of  wealth  must  result  in  an  increased 
demand  for  land  and  the  direct  products  of  land.  The 
man  who  now  uses  coarse  food,  and  lives  in  a  small  house, 
will,  as  a  rule,  if  his  income  be  increased,  use  more  costly 
food,  and  move  to  a  larger  house.  If  he  grows  richer 
and  richer  he  will  procure  horses,  servants,  gardens  and 
lawns,  his  demand  for  the  use  of  land  constantly  increas- 
ing with  his  wealth.  In  the  city  where  I  write,  is  a  man 
— but  the  type  of  men  everywhere  to  be  found — who 
used  to  boil  his  own  beans  and  fry  his  own  bacon,  but 
who,  now  that  he  has  got  rich,  maintains  a  town  house 
that  takes  up  a  whole  block  and  would  answer  for  a  first- 
class  hotel,  two  or  three  country  houses  with  extensive 
grounds,  a  large  stud  of  racers,  a  breeding  farm,  private 
track,   eto.      It    certainly   takes    at    least    a   thousand 


Chap.m.  lilPROVEMENTS   IN"   THE    AET3.  347 

times,  it  may  be  several  thousand  times,  as  mucli  land 
to  supply  the  demands  of  this  man  now  aa  it  did  when 
he  was  poor. 

And,  so,  every  improvement  or  invention,  no  matter 
what  it  be,  which  gives  to  labor  the  power  of  producing 
more  wealth,  causes  an  increased  demand  for  land  and 
its  direct  products,  and  thus  tends  to  force  down  the 
margin  of  cultivation,  just  as  would  the  demand  caused 
by  an  increased  population.  This  being  the  case,  every 
labor-saving  invention,  whether  it  be  a  steam  plow,  a 
telegraph,  an  improved  process  of  smelting  ores,  a  per- 
fecting printing  press,  or  a  sewing  machine,  has  a  tend- 
ency to  increase  rent. 

Or   to  state  this  truth  concisely: 

Wealth  in  all  its  forms  being  the  product  of  labor  applied 
to  land  or  the  products  of  land,  amj  increase  in  the  power 
of  labor,  the  demand  for  wealth  being  unsatisfied,  will  be 
utilized  in  procuring  more  luealth,  and  thus  increase  the 
demand  for  land. 

To  illustrate  this  effect  of  labor-saving  machinery  and 
improvements,  let  us  suppose  a  country  where,  as  in  all 
the  countries  of  the  civilized  world,  the  land  is  in  the 
possession  of  but  a  portion  of  the  people.  Let  us  sup- 
pose a  permanent  barrier  fixed  to  further  increase  of 
population,  either  by  the  enactment  and  strict  enforce- 
ment of  an  Herodian  law,  or  from  such  a  change  in 
manners  and  morals  as  might  result  from  an  extensive 
circulation  of  Annie  Besant's  pamphlets.  Let  the  mar- 
gin of  cultivation,  or  production,  be  represented  by  20. 
Thus  land  or  other  natural  opportunities  which,  from 
the  application  of  labor  and  capital,  will  yield  a  return 
of  20,  will  just  give  the  ordinary  rate  of  wages  and  in- 
terest, without  yielding  any  rent;  while  all  lands  yielding 
to  equal   applications  of  labor  and  capital  more  than  20 


248  EFFECTS   OF  MATERIAL   PROGRESS.  Book  IV. 

will  yield  the  excess  as  rent.  Population  remaining 
fixed,  let  there  be  made  inventions  and  improvements 
which  will  reduce  by  one-tenth  the  expenditure  of  labor 
and  capital  necessary  to  produce  the  same  amount  of 
wealth.  Now,  either  one-tenth  of  the  labor  and  capital 
may  be  freed,  and  production  remain  the  same  as  before; 
or  the  same  amount  of  labor  and  capital  may  be  em- 
ployed, and  production  be  correspondingly  increased. 
But  the  industrial  organization,  as  in  all  civilized  coun- 
tries, is  such  that  labor  and  capital,  and  especially  labor, 
must  press  for  employment  on  any  terms — the  industrial 
organization  is  such  that  mere  laborers  are  not  in  a  posi- 
tion to  demand  their  fair  share  in  the  new  adjustment, 
and  that  any  reduction  in  the  application  of  labor  to  pro- 
duction will,  at  first,  at  least,  take  the  form,  not  of  giving 
each  laborer  the  same  amount  of  produce  for  less  work, 
but  of  throwing  some  of  the  laborers  out  of  work  and 
giving  them  none  of  the  produce.  Now,  owing  to  the 
increased  efficiency  of  labor  secured  by  the  new  improve- 
ments, as  great  a  return  can  be  secured  at  the  point  of 
natural  productiveness  represented  by  18,  as  before  at  20. 
Thus,  the  unsatisfied  desire  for  wealth,  the  competition 
of  labor  and  capital  for  employment,  would  insure  the 
extension  of  the  margin  of  production,  we  will  say  to  18, 
and  thus  rent  would  be  increased  by  the  difference  be- 
tween 18  and  20,  while  wages  and  interest,  in  quantity, 
would  be  no  more  than  before,  and,  in  proportion  to  the 
whole  produce,  would  be  less.  There  would  be  a 
greater  production  of  wealth,  but  land  owners  would  get 
the  whole  benefit,  subject  to  temporary  deductions, 
which  will  be  hereafter  stated. 

If  invention  and  improvement  still  go  on,  the  efficiency 
of  labor  will  be  still  further  increased,  and  the  amount 
of  labor  and  capital  necessary  to  produce  a  given  result 
further  diminished.  The  same  causes  will  lead  to  the 
utilization  of  this  new  gain  in  productive  power  for  the 


Chap.  III.  IMPROVEMENTS  IN  THE  AETS.  349 

production  of  more  wealtli;  the  margin  of  cultivation 
will  be  again  extended,  and  rent  will  increase,  both  in 
proportion  and  amount,  without  any  increase  in  wages 
and  interest.  And,  so,  as  invention  and  improvement 
go  on,  constantly  adding  to  the  ethcioncy  of  labor,  the 
margin  of  production  will  be  pushed  lower  and  lower, 
and  rent  constantly  increased,  though  population  should 
remain  stationary. 

I  do  not  mean  to  say  that  the  lowering  of  the  margin 
of  production  would  always  exactly  correspond  with  the 
increase  in  productive  power,  any  more  than  I  mean  to 
say  that  the  process  would  be  one  of  clearly  defined 
steps.  Whether,  in  any  particular  case,  the  lowering  of 
the  margin  of  production  lags  behind  or  exceeds  the  in- 
crease in  productive  power,  will  depend,  I  conceive,  upon 
what  may  be  called  the  area  of  productiveness  tliat  can 
be  utilized  before  cultivation  is  forced  to  the  next  lowest 
point.  For  instance,  if  the  margin  of  cultivation  be  at 
20,  improvements  which  enable  the  same  produce  to  be 
obtained  with  one-tenth  less  capital  and  labor  will  not 
carry  the  margin  to  18,  if  the  area  having  a  produc- 
tiveness of  19  is  sufficient  to  employ  all  the  labor  and 
capital  displaced  from  the  cultivation  of  the  superior 
lands.  In  this  case,  the  margin  of  cultivation  would 
rest  at  19,  and  rents  would  be  increased  by  the  dif- 
ference between  19  and  20,  and  wages  and  interest  by 
the  difference  between  18  and  10.  But  if,  with  the  same 
increase  in  productive  power  tlie  area  of  productiveness 
between  20  and  18  should  not  be  sufficient  to  employ  all 
the  displaced  labor  and  capital,  the  margin  of  cultivation 
must,  if  the  same  amount  of  labor  and  capital  press  for 
employment,  be  carried  lower  than  18.  In  this  case, 
rent  would  gain  more  than  the  increase  in  the  product, 
and  wages  and  interest  would  be  less  than  before  the  im- 
provements which  increased  productive  power. 

Nor  is  it  precisely  true  that  the  labor  set  free  by  each 


250  EFFECTS  OF  MATERIAL   PROGRESS.  Book  IV. 

improvement  will  all  be  driven  to  seek  employment  in 
the  production  of  more  wealth.  The  increased  power  of 
satisfaction,  which  each  fresh  improvement  gives  to  a 
certain  portion  of  the  community,  will  be  utilized  in  de- 
manding leisure  or  services,  as  well  as  in  demanding 
wealth.  Some  laborers  will,  therefore,  become  idlers 
and  some  will  pass  from  the  ranks  of  productive  to  those 
of  unproductive  laborers — the  proportion  of  which,  as 
observation  shows,  tends  to  increase  with  the  progress  of 
society. 

But,  as  I  shall  presently  refer  to  a  cause,  as  yet  uncon- 
sidered, which  constantly  tends  to  lower  the  margin  of 
cultivation,  to  steady  the  advance  of  rent,  and  even  carry 
it  beyond  the  proportion  that  would  be  fixed  by  the 
actual  margin  of  cultivation,  it  is  not  worth  while  to 
take  into  account  these  perturbations  in  the  downward 
movement  of  the  margin  of  cultivation  and  the  upward 
movement  of  rent.  All  I  wish  to  make  clear  is  that, 
without  any  increase  in  population,  the  progress  of  in- 
vention constantly  tends  to  give  a  larger  proportion  of 
the  produce  to  the  owners  of  land,  and  a  smaller  and 
smaller  proportion  to  labor  and  capital. 

And,  as  we  can  assign  no  limits  to  the  progress  of  in- 
vention, neither  can  we  assign  any  limits  to  the  increase 
of  rent,  short  of  the  whole  produce.  For,  if  labor-saving 
inventions  went  on  until  perfection  was  attained,  and 
the  necessity  of  labor  in  the  production  of  wealth  was 
entirely  done  away  with,  then  everything  that  the  earth 
could  yield  could  be  obtained  without  labor,  and  the 
margin  of  cultivation  would  be  extended  to  zero.  Wages 
would  be  nothing,  and  interest  would  be  nothing,  while 
rent  would  take  everything.  For  the  owners  of  the 
land,  being  enabled  without  labor  to  obtain  all  the  wealth 
that  could  be  procured  from  nature,  there  would  be  no 
use  for  either  labor  or  capital,  and  no  possible  way  in 
which  either  could  compel  any  share  of  the  wealth  pro- 


Chap.  111.  IMPROVEMENTS    IX   THE   ARTS.  251 

duced.  And  no  matter  how  small  population  might  be, 
if  anybody  but  the  land  owners  continued  to  exist,  it 
would  be  at  the  whim  or  by  the  mercy  of  the  land  owners 
— they  would  be  maintained  either  for  the  amusement 
of  the  land  owners,  or,  as  paupers,  by  their  bounty. 

This  point,  of  the  absolute  perfection  of  labor-saving 
inventions,  may  seem  very  remote,  if  not  impossible  of 
attainment;  but  it  is  a  point  toward  which  the  march  of 
invention  is  every  day  more  strongly  tending.  And  in 
the  thinning  out  of  population  in  the  agricultural  dis- 
tricts of  Great  Britain,  where  small  farms  are  being  con- 
verted into  larger  ones,  and  in  the  great  machine-worked 
wheat-fields  of  California  and  Dakota,  where  one  may 
ride  for  miles  and  miles  through  waving  grain  without 
seeing  a  human  habitation,  there  are  already  suggestions 
of  the  final  goal  toward  which  the  whole  civilized  world 
is  hastening.  The  steam  plow  and  the  reaping  machine 
are  creating  in  the  modern  world  latifundia  of  the  same 
kind  that  the  influx  of  slaves  from  foreign  wars  created 
in  ancient  Italy.  And  to  many  a  poor  fellow  as  he  is 
shoved  out  of  his  accustomed  place  and  forced  to  move 
on — as  the  Koman  farmers  were  forced  to  join  the  pro- 
letariat of  the  great  city,  or  sell  their  blood  for  bread  in 
the  ranks  of  the  legions — it  seems  as  though  these  labor- 
saving  inventions  were  in  themselves  a  curse,  and  we 
hear  men  talking  of  work,  as  though  the  wearying  strain 
of  the  muscles  were,  in  itself,  a  thing  to  be  desired. 

In  what  has  preceded,  I  have,  of  course,  spoken  of  in- 
ventions and  improvements  when  generally  diffused.  It 
is  hardly  necessary  to  say  that  as  long  as  an  invention  or 
an  improvement  is  used  by  so  few  that  they  derive  a 
special  advantage  from  it,  it  does  not,  to  the  extent  of 
this  special  advantage,  affect  the  general  distribution  of 
wealth.  So,  in  regard  to  the  limited  monopolies  created 
by  patent  laws,  or  by  the  causes  which  give  the  same 
character  to  railroad  and  telegraph  lines,  etc.     Although 


253  EFFECTS  OF  MATERIAL   PROGRESS.  Book  IV. 

generally  mistaken  for  profits  of  capital,  the  special  prof- 
its thns  arising  are  really  the  returns  of  monopoly,  as  has 
been  explained  in  a  previous  chapter,  and,  to  the  extent 
that  they  subtract  from  the  benefits  of  an  improvement, 
do  not  primarily  afiect  general  distribution.  For  in- 
stance, the  benefits  of  a  railroad  or  similar  improvement 
in  cheapening  transportation  are  diffused  or  monopolized, 
as  its  charges  are  reduced  to  a  rate  which  will  yield  ordi- 
nary interest  on  the  capital  invested,  or  kept  up  to  a 
point  which  will  yield  an  extraordinary  return,  or  cover 
the  stealing  of  the  constructors  or  directors.  And,  as  is 
well  known,  the  rise  in  rent  or  land  values  corresponds 
with  the  reduction  in  the  charges. 

As  has  before  been  said,  in  the  improvements  which 
advance  rent,  are  not  only  to  be  included  the  improve- 
ments which  directly  increase  productive  power,  but  also 
such  improvements  in  government,  manners,  and  morals 
as  indirectly  increase  it.  Considered  as  material  forces, 
the  effect  of  all  these  is  to  increase  productive  power, 
and,  like  improvements  in  the  productive  arts,  their 
benefit  is  ultimately  monopolized  by  the  possessors  of 
the  land,  A  notable  instance  of  this  is  to  be  found  in 
the  abolition  of  protection  by  England.  Free  trade  has 
enormously  increased  the  wealth  of  Great  Britain,  with- 
out lessening  pauperism.  It  has  simply  increased  rent. 
And  if  the  corrupt  governments  of  our  great  American 
cities  were  to  be  made  models  of  purity  and  economy,  the 
effect  would  simply  be  to  increase  the  value  of  land,  not 
to  raise  either  wages  or  interest. 


CHAPTER  IV. 

EFFECT   OF  THE   EXPECTATION    RAISED   BY   MATERIAL 

PROGRESS. 

We  have  now  seen  that  while  advancing  population 
tends  to  advance  rent,  so  all  the  causes  that  in  a  pro- 
gressive state  of  society  operate  to  increase  the  iDroduc- 
tive  power  of  labor  tend,  also,  to  advance  rent,  and  not 
to  advance  Avages  or  interest.  The  increased  production 
of  wealth  goes  ultimately  to  the  owners  of  land  in  in- 
creased rent;  and,  although,  as  improvement  goes  on, 
advantages  may  accrue  to  individuals  not  land  holders, 
which  concentrate  in  their  hands  considerable  portions  of 
the  increased  produce,  yet  there  is  in  all  this  improve- 
ment nothing  which  tends  to  increase  the  general  return 
either  to  labor  or  to  capital. 

But  there  is  a  cause,  not  yet  adverted  to,  which  must 
be  taken  into  consideration  fully  to  explain  the  influence 
of  material  progress  upon  the  distribution  of  wealth. 

That  cause  is  the  confident  expectation  of  the  future 
enhancement  of  land  values,  which  arises  in  all  progress- 
ive countries  from  the  steady  increase  of  rent,  and  which 
leads  to  speculation,  or  the  holding  of  land  for  a  higher 
price  than  it  would  then  otherwise  bring. 

We  have  hitherto  assumed,  as  is  generally  assumed  in 
elucidations  of  the  theory  of  rent,  that  the  actual  margin 
of  cultivation  always  coincides  Avith  what  may  be  termed 
the  necessary  margin  of  cultivation — that  is  to  say,  we 
have  assumed  that  cultivation  extends  to  less  productive 
points  only  as  it  becomes  necessary  from  the  fact  that 
natural  opportunities  are  at  the  more  productive  points 
fully  utilized. 


354  EFFECTS  OF   MATERIAL  PROGRESS.  Book  IV. 

This,  probably,  is  the  case  in  stationary  or  very  slowly 
progressing  communities,  but  in  rapidly  progressing 
communities,  where  the  swift  and  steady  increase  of  rent 
gives  confidence  to  calculations  of  further  increase,  it  is 
not  the  case.  In  such  communities,  the  confident  ex- 
pectation of  increased  prices  produces,  to  a  greater  or 
less  extent,  the  effects  of  a  combination  among  land 
holders,  and  tends  to  the  withholding  of  land  from  use, 
in  expectation  of  higher  prices,  thus  forcing  the  margin 
of  cultivation  farther  than  required  by  the  necessities  of 
production. 

This  cause  must  operate  to  some  extent  in  all  progress- 
ive communities,  though  in  such  countries  as  England, 
where  the  tenant  system  prevails  in  agriculture,  it  may 
be  shown  more  in  the  selling  price  of  land  than  in  the 
agricultural  margin  of  cultivation,  or  actual  rent.  But 
in  communities  like  the  United  States,  where  the  user  of 
land  generally  prefers,  if  he  can,  to  own  it,  and  where 
there  is  a  great  extent  of  land  to  overrun,  it  operates 
with  enormous  power. 

The  immense  area  over  which  the  population  of  the 
United  States  is  scattered  shows  this.  The  man  who 
sets  out  from  the  Eastern  seaboard  in  search  of  the  mar- 
gin of  cultivation,  where  he  may  obtain  land  without 
paying  rent,  must,  like  the  man  who  swam  the  river  to 
get  a  drink,  pass  for  long  distances  through  half-tilled 
farms,  and  traverse  vast  areas  of  virgin  soil,  before  he 
reaches  the  point  where  land  can  be  had  free  of  rent — 
i.e.,  by  homestead  entry  or  pre-emption.  He  (and,  with 
him,  the  margin  of  cultivation)  is  forced  so  much  farther 
than  he  otherwise  need  have  gone,  by  the  speculation 
which  is  holding  these  unused  lands  in  expectation  of  in- 
creased value  in  the  future.  And  when  he  settles,  he 
will,  in  his  turn,  take  up,  if  he  can,  more  land  than  he 
can  use,  in  the  belief  that  it  will  soon  become  valuable; 
and  so  those  who  follow  him  are  again  forced  farther  on 


Chap.JV.  EXPECTATION    RAISED.  355 

than  the  necessities  of  production  require,  carrying  the 
margin  of  cultivation  to  still  less  productive,  because  still 
more  remote  points. 

The  same  thing  may  be  seen  in  every  rapidly  growing 
city.  If  the  land  of  superior  quality  as  to  location  were 
always  fully  used  before  land  of  inferior  quality  were 
resorted  to,  no  vacant  lots  would  be  left  as  a  city  ex- 
tended, nor  would  we  find  miserable  shanties  in  the  midst 
of  costly  buildings.  These  lots,  some  of  them  extremely 
valuable,  are  withheld  from  use,  or  from  the  full  use  to 
which  they  might  be  put,  because  their  owners,  not  being 
able  or  not  wishing  to  improve  them,  prefer,  in  expecta- 
tion of  the  advance  of  land  values,  to  hold  them  for  a 
higher  rate  than  could  now  be  obtained  from  those  will- 
ing to  improve  them.  And,  in  consequence  of  this  land 
being  withheld  from  use,  or  from  the  full  use  of  which 
it  is  capable,  the  margin  of  the  city  is  pushed  away  so 
much  farther  from  the  center. 

But  when  we  reach  the  limits  of  the  growing  city — the 
actual  margin  of  building,  Avhich  corresponds  to  the  mar- 
gin of  cultivation  in  agriculture — we  shall  not  find  the 
land  purchasable  at  its  value  for  agricultural  purposes,  as 
it  would  be  were  rent  determined  simply  by  present  re- 
quirements; but  we  shall  find  that  for  a  long  distance 
beyond  the  city  land  bears  a  speculative  value,  based 
upon  the  belief  that  it  will  be  required  in  the  future  for 
urban  purposes,  and  that  to  reach  the  point  at  which  land 
can  be  purchased  at  a  price  not  based  upon  urban  rent, 
we  must  go  very  far  beyond  the  actual  margin  of  urban 
use. 

Or,  to  take  another  case  of  a  different  kind,  instances 
similar  to  which  may  doubtless  be  found  in  every  locality. 
There  is  in  Marin  County,  within  easy  access  of  San 
Francisco,  a  fine  belt  of  redwood  timber.  Naturally, 
this  would  be  first  used,  before  resorting  for  the  supply 
of  the  San  Francisco  market  to  timber  lands  at  a  much 


256  EFFECTS   OF   MATERIAL   PEOGRESS.  Book  IV. 

greater  distance.  But  it  yet  remains  uncut^  and  lumber 
procured  many  miles  beyond  is  daily  hauled  past  it  on 
the  railroad,  because  its  owner  prefers  to  hold  for  the 
greater  price  it  will  bring  in  the  future.  Thus,  by  the 
withholding  from  use  of  this  body  of  timber,  the  margin 
of  production  of  redwood  is  forced  so  much  farther  up 
and  down  the  Coast  Range.  That  mineral  land,  when 
reduced  to  private  ownership,  is  frequently  withheld 
from  use  while  poorer  deposits  are  worked,  is  well  known, 
and  in  new  States  it  is  common  to  find  individuals  who 
are  called  "land  poor" — that  is,  who  remain  poor,  some- 
times almost  to  deprivation,  because  they  insist  on  hold- 
ing land,  which  they  themselves  cannot  use,  at  prices  at 
which  no  one  else  can  profitably  use  it. 

To  recur  now  to  the  illustration  we  made  use  of  in  the 
preceding  chapter:  With  the  margin  of  cultivation 
standing  at  20,  an  increase  in  the  power  of  production 
takes  place,  which  renders  the  same  result  obtainable 
with  one-tenth  less  labor.  For  reasons  before  stated, 
the  margin  of  production  must  now  be  forced  down,  and 
if  it  rests  at  18,  the  return  to  labor  and  capital  will  be 
the  same  as  before,  when  the  margin  stood  at  20. 
Whether  it  will  be  forced  to  18  or  be  forced  lower  depends 
upon  what  I  have  called  the  area  of  productiveness  which 
intervenes  between  20  and  18.  But  if  the  confident  ex- 
pectation of  a  further  increase  of  rents  leads  the  land 
owners  to  demand  3  rent  for  20  land,  2  for  19,  and  1  for 
18  land,  and  to  withhold  their  land  from  use  until  these 
terms  are  complied  with,  the  area  of  productiveness  may 
be  so  reduced  that  the  margin  of  cultivation  must  fall  to 
17  or  even  lower;  and  thus,  as  the  result  of  the  increase 
in  the  eflBciency  of  labor,  laborers  would  get  less  than 
before,  while  interest  would  be  proportionately  reduced, 
and  rent  would  increase  in  greater  ratio  than  the  increase 
in  productive  power. 

Whether  we  formulate  it  as  an  extension  of  the  margin 


Chap.  IV.  EXPECTATION   RAISED.  357 

of  production,  or  as  a  carrying  of  the  rent  line  beyond 
the  margin  of  production,  the  influence  of  speculation  in 
land  in  increasing  rent  is  a  great  fact  which  cannot  be 
ignored  in  any  complete  theory  of  the  distribution  of 
wealth  in  progressive  countries.  It  is  the  force,  evolved 
by  material  progress,  which  tends  constantly  to  increase 
rent  in  a  greater  ratio  than  progress  increases  production, 
and  thus  constantly  tends,  as  material  progress  goes  on 
and  productive  power  increases,  to  reduce  wages,  not 
merely  relatively,  but  absolutely.  It  is  this  expansive 
force  which,  operating  with  great  power  in  new  coun- 
tries, brings  to  them,  seemingly  long  before  their  time, 
the  social  diseases  of  older  countries;  produces  "tramps" 
on  virgin  acres,  and  breeds  paupers  on  half-tilled  soil. 

In  short,  the  general  and  steady  advance  in  land  values 
in  a  progressive  community  necessarily  produces  that  ad- 
ditional tendency  to  advance  which  is  seen  in  the  case  of 
commodities  when  any  general  and  continuous  cause  oper- 
ates to  increase  their  price.  As,  during  the  rapid  de- 
preciation of  currency  which  marked  the  latter  days  of 
the  Southern  Confederacy,  the  fact  that  whatever  was 
bought  one  day  could  be  sold  for  a  higher  price  the  next, 
operated  to  carry  up  the  prices  of  commodities  even 
faster  than  the  depreciation  of  the  currency,  so  does  the 
steady  increase  of  land  values,  which  material  progress 
produces,  operate  still  further  to  accelerate  the  increase. 
We  see  this  secondary  cause  operating  in  full  force  in 
those  manias  of  land  speculation  which  mark  the  growth 
of  new  communities;  but  though  these  are  the  abnormal 
and  occasional  manifestations,  it  is  undeniable  that  the 
cause  steadily  operates,  with  greater  or  less  intensity,  in 
all  progressive  societies. 

The  cause  which  limits  speculation  in  commodities, 
the  tendency  of  increasing  price  to  draw  forth  additional 
supplies,  cannot  limit  the  speculative  advance  in  laud 
values,  as  laud  is  a  fixed  quantity,  which  human  agency 


258  EFFECTS  OF  MATEKIAL  PROGEESS.  Book  IV.  ] 

can  neither  increase  nor  diminish;  but  there  is  neverthe- 
less a  limit  to  the  price  of  land,  in  the  minimnm  required  1 
by  labor  and  capital  as  the  condition  of  engaging  in  pro-  ! 
duction.     If  it   were   possible    continuously   to   reduce  ' 
wages  until  zero  were  reached,  it  would  be  possible  con- 
tinuously to   increase   rent   until   it   swallowed   up  the  , 
whole   produce.     But  as  wages  cannot  be   permanently            j 
reduced  below  the  point  at  which  laborers  will  consent 
to  work  and  reproduce,  nor  interest  below  the  point  at 
which  capital  will  be  devoted  to  production,  there  is  a 
limit  which  restrains  the  speculative  advance  of  rent. 
Hence  speculation  cannot  have  the  same  scope  to  ad-            j 
vance  rent  in  countries  where  wages  and  interest  are            ' 
already  near  the  minimum,  as  in  countries  where  they 
are  considerably  above  it.     Yet  that  there  is  in  all  pro- 
gressive countries  a  constant  tendency  in  the  speculative 
advance  of  rent  to  overpass  the  limit  where  production            j 
would  cease,  is,  I  think,  shown  by  recurring  seasons  of            i 
industrial  paralysis — a  matter  which  will  be  more  fully            ] 
examined  in  the  next  book.                                                              i 


BOOK  V. 

THE  PEOBLEM  SOLVED. 


CHAPTER  I. — THE  PRIMARY  CAUSE  OF  RECURRING  PAR- 
OXYSMS  OF   INDUSTRIAL    DEPRESSION. 

CHAPTER  II. — THE  PERSISTENCE  OF  POVERTY  AMID  AD- 
VANCING  WEALTH. 


To  whomsoever  the  soil  at  any  time  belongs,  to  him  belong  the 
fruits  of  it.  White  parasols,  and  elephants  mad  with  pride  are  the 
flowers  of  a  grant  of  land. — Sir  Wm.  Jones'  translation  of  an  Indian 
grant  of  land,  found  at  TannM. 


The  widow  is  gathering  nettles  for  her  children's  dinner;  a  per- 
fumed seigneur,  delicately  lounging  in  the  CEil  de  Bceuf,  hath  an 
alchemy  whereby  he  will  extract  from  her  the  third  nettle,  and  call 
it  rent. — Carlyle. 


CHAPTER  I. 

THE   PRIMARY    CAUSE   OF   RECURRING     PAROXYSMS   OF 
INDUSTRIAL    DEPRESSION. 

Our  long  inquiry  is  ended.  We  may  now  marshal  the 
results. 

To  begin  with  the  industrial  depressions,  to  account 
for  which  so  many  contradictory  and  self-contradictory 
theories  are  broached. 

A  consideration  of  the  manner  in  which  the  specula- 
tive advance  in  laud  values  cuts  down  the  earnings  of 
labor  and  capital  and  checks  production  leads,  I  think, 
irresistibly  to  the  conclusion  that  this  is  the  main  cause 
of  those  periodical  industrial  depressions  to  which  every 
civilized  country,  and  all  civilized  countries  together, 
seem  increasingly  liable. 

I  do  not  mean  to  say  that  there  are  not  other  proxi- 
mate causes.  The  growing  complexity  and  interdepend- 
ence of  the  machinery  of  production,  which  makes  each 
shock  or  stoppage  propagate  itself  through  a  widening 
circle;  the  essential  defect  of  currencies  which  contract 
when  most  needed,  and  the  tremendous  alternations  in 
volume  that  occur  in  the  simpler  forms  of  commercial 
credit,  which,  to  a  much  greater  extent  than  currency  in 
any  form,  constitute  the  medium  or  flux  of  exchanges; 
the  protective  tariffs  which  present  artificial  barriers  to 
the  interplay  of  productive  forces,  and  other  similar 
causes,  undoubtedly  bear  important  part  in  producing 
and  continuing  what  are  called  hard  times.  But,  both 
from  the  consideration  of  principles  and  the  observation 
of  phenomena,  it  is  clear  that  the  great  initiatory  cause 


262  THE   PEOBLEM   SOLVED.  Book  V. 

is  to  be  looked  for  in  the  speculative  advance  of  land 
values. 

In  the  preceding  chapter  I  have  shown  that  the  specu- 
lative advance  in  land  values  tends  to  press  the  margin  of 
cultivation,  or  production,  beyond  its  normal  limit,  thus 
compelling  labor  and  capital  to  accept  of  a  smaller  re- 
turn, or  (and  this  is  the  only  way  they  can  resist  the 
tendency)  to  cease  production.  Now,  it  is  not  only 
natural  that  labor  and  capital  should  resist  the  crowding 
down  of  wages  and  interest  by  the  speculative  advance  of 
rent,  but  they  are  driven  to  this  in  self-defense,  inasmuch 
as  there  is  a  minimum  of  return  below  which  labor  can- 
not exist  nor  capital  be  maintained.  Hence,  from  the 
fact  of  speculation  in  land,  we  may  infer  all  the  phe- 
nomena which  mark  these  recurring  seasons  of  industrial 
depression. 

Given  a  progressive  community,  in  which  population  is 
increasing  and  one  improvement  succeeds  another,  and 
land  must  constantly  increase  in  value.  This  steady  in- 
crease naturally  leads  to  speculation  in  which  future  in- 
crease is  anticipated,  and  land  values  are  carried  beyond 
the  point  at  which,  under  the  existing  conditions  of 
production,  their  accustomed  returns  would  be  left  to 
labor  and  capital.  Production,  therefore,  begins  to  stop. 
Not  that  there  is  necessarily,  or  even  probably,  an  abso- 
lute diminution  in  production;  but  that  there  is  what  in 
a  progressive  community  would  be  equivalent  to  an  abso- 
lute diminution  of  production  in  a  stationary  community 
— a  failure  in  production  to  increase  proportionately, 
owing  to  the  failure  of  new  increments  of  labor  and 
capital  to  find  employment  at  the  accustomed  rates. 

This  stoppage  of  production  at  some  points  must  nec- 
essarily show  itself  at  other  points  of  the  industrial  net- 
work, in  a  cessation  of  demand,  which  would  again  check 
production  there,  and  thus  the  paralysis  would  communi- 
cate itself  through  all  the  interlacings  of  industry  and 


Chap.  I.  CAUSE   OF   INDUSTRIAL   DEPRESSION.  263 

commerce,  producing  everywhere  a  partial  disjointing  of 
production  and  exchange,  and  resulting  in  the  phe- 
nomena that  seem  to  show  overproduction  or  over- 
consumption,  according  to  the  standpoint  from  which 
they  are  viewed. 

The  period  of  depression  thus  ensuing  would  continue 
until  (1)  the  speculative  advance  in  rents  had  been  lost; 
or  (2)  the  increase  in  the  efficiency  of  labor,  owing  to  the 
growth  of  population  and  the  progress  of  improvement, 
had  enabled  the  normal  rent  line  to  overtake  the  specu- 
lative rent  line;  or  (3)  labor  and  capital  had  become 
reconciled  to  engaging  in  production  for  smaller  returns. 
Or,  most  probably,  all  three  of  these  causes  would  co- 
operate to  produce  a  new  equilibrium,  at  which  ail  the 
forces  of  production  would  again  engage,  and  a  season  of 
activity  ensue;  whereupon  rent  would  begin  to  advance 
again,  a  speculative  advance  again  take  place,  production 
again  be  checked,  and  the  same  round  be  gone  over. 

In  the  elaborate  and  complicated  system  of  production 
which  is  characteristic  of  modern  civilization,  where, 
moreover,  there  is  no  such  thing  as  a  distinct  and  inde- 
pendent industrial  community,  but  geographically  or 
politically  separated  communities  blend  and  interlace 
their  industrial  organizations  in  different  modes  and 
varying  measures,  it  is  not  to  be  expected  that  effect 
should  be  seen  to  follow  cause  as  clearly  and  definitely  as 
would  be  the  case  in  a  simpler  development  of  industry, 
and  in  a  community  forming  a  complete  and  distinct  in- 
dustrial whole;  but,  nevertheless,  the  phenomena  actu- 
ally presented  by  these  alternate  seasons  of  activity  and 
depression  clearly  correspond  with  those  we  have  inferred 
from  the  speculative  advance  of  rent. 

Deduction  thus  shows  the  actual  phenomena  as  result- 
ing from  the  principle.  If  we  reverse  the  process,  it  is 
as  easy  by  induction  to  reach  the  principle  by  tracing  up 
the  phenomena. 


264  THE   PROBLEM   SOLVED.  Book  V. 

These  seasons  of  depression  are  always  preceded  by 
seasons  of  activity  and  speculation,  and  on  all  hands  the 
connection  between  the  two  is  admitted — the  depression 
being  looked  upon  as  the  reaction  from  the  speculation, 
as  the  headache  of  the  morning  is  the  reaction  from  the 
debauch  of  the  night.  But  as  to  the  manner  in  which 
the  depression  results  from  the  speculation,  there  are  two 
classes  or  schools  of  opinion,  as  the  attempts  made  on 
both  sides  of  the  Atlantic  to  account  for  the  present  in- 
dustrial depression  will  show. 

One  school  says  that  the  speculation  produced  the  de- 
pression by  causing  overproduction,  and  point  to  the 
warehouses  filled  with  goods  that  cannot  be  sold  at 
remunerative  prices,  to  mills  closed  or  working  on  half 
time,  to  mines  shut  down  and  steamers  laid  up,  to  money 
lying  idly  in  bank  vaults,  and  workmen  compelled  to 
idleness  and  privation.  They  point  to  these  facts  as 
showing  that  the  production  has  exceeded  the  demand 
for  consumption,  and  they  point,  moreover,  to  the  fact 
that  when  government  during  war  enters  the  field  as  an 
enormous  consumer,  brisk  times  prevail,  as  in  the  United 
States  during  the  civil  war  and  in  England  during  the 
Napoleonic  struggle. 

The  other  school  says  that  the  speculation  has  pro- 
duced the  depression  by  leading  to  overconsumption, 
and  point  to  full  warehouses,  rusting  steamers,  closed 
mills,  and  idle  workmen  as  evidences  of  a  cessation  of 
effective  demand,  which,  they  say,  evidently  results  from 
the  fact  that  people,  made  extravagant  by  a  fictitious 
prosperity,  have  lived  beyond  their  means,  and  are  now 
obliged  to  retrench — that  is,  to  consume  less  wealth. 
They  point,  moreover,  to  the  enormous  consumption  of 
wealth  by  wars,  by  the  building  of  unremunerative  rail- 
roads, by  loans  to  bankrupt  governments,  etc.,  as  extrav- 
agances which,  though  not  felt  at  the  time,  just  as  the 
spendthrift  does  not  at  the  moment  feel  the  impairment 


Chap.  I.  CAUSE  OF  INDUSTRIAL  DEPRESSION".  265 

of  his  fortune,  must  now  be  made  up  by  a  season  of 
reduced  consumption. 

Now,  each  of  these  theories  evidently  expresses  one 
side  or  phase  of  a  general  truth,  but  each  of  them  evi- 
dently fails  to  comprehend  the  full  truth.  As  an  ex- 
planation of  the  phenomena,  each  is  equally  and  utterly 
preposterous. 

For  while  the  great  masses  of  men  want  more  wealth 
than  they  can  get,  and  while  they  are  willing  to  give  for 
it  that  which  is  the  basis  and  raw  material  of  wealth — 
their  labor — how  can  there  be  overproduction?  And 
while  the  machinery  of  production  wastes  and  producers 
are  condemned  to  unwilling  idleness,  how  can  there  be 
overconsumption  ? 

When,  with  the  desire  to  consume  more,  there  co-exist 
the  ability  and  willingness  to  produce  more,  industrial 
and  commercial  paralysis  cannot  be  charged  either  to 
overproduction  or  to  overconsumption.  Manifestly, 
the  trouble  is  that  production  and  consumption  cannot 
meet  and  satisfy  each  other. 

How  does  this  inability  arise?  It  is  evidently  and  by 
common  consent  the  result  of  speculation.  But  of  specu- 
lation in  what? 

Certainly  not  of  speculation  in  things  which  are  the 
prodacts  of  labor — in  agricultural  or  mineral  productions, 
or  manufactured  goods,  for  the  effect  of  speculation  in 
such  things,  as  is  well  shown  in  current  treatises  that 
spare  me  the  necessity  of  illustration,  is  simply  to  equal- 
ize supply  and  demand,  and  to  steady  the  interplay  of 
production  and  consumption  by  an  action  analogous  to 
that  of  a  fly-wheel  in  a  machine. 

Therefore,  if  speculation  be  the  cause  of  these  indus- 
trial depressions,  it  must  be  speculation  in  things  not  the 
production  of  labor,  but  yet  necessary  to  the  exertion  of 
labor  in  the  production  of  wealth— of  things  of  fixed 
quantity;  that  is  to  say,  it  must  be  speculation  in  land. 


^66  THE   PKOBLEM   SOLVED.  Book  V. 

That  land  speculation  is  the  true  cause  of  industrial 
depression  is,  in  the  United  States,  clearly  evident.  In 
each  period  of  industrial  activity  land  values  have  stead- 
ily risen,  culminating  in  speculation  which  carried  them 
up  in  great  jumps.  This  has  been  invariably  followed  by 
a  partial  cessation  of  production,  and  its  correlative,  a 
cessation  of  effective  demand  (dull  trade),  generally 
accompanied  by  a  commercial  crash;  and  then  has  suc- 
ceeded a  period  of  comparative  stagnation,  during  which 
the  equilibrium  has  been  again  slowly  established,  and 
the  same  round  been  run  again.  This  relation  is 
observable  throughout  the  civilized  world.  Periods  of 
industrial  activity  always  culminate  in  a  speculative 
advance  of  land  values,  followed  by  symptoms  of  checked 
production,  generally  shown  at  first  by  cessation  of  de- 
mand from  the  newer  countries,  where  the  advance  in 
land  values  has  been  greatest. 

That  this  must  be  the  main  explanation  of  these 
periods  of  depression,  will  be  seen  by  an  analysis  of  the 
facts. 

All  trade,  let  it  be  remembered,  is  the  exchange  of 
commodities  for  commodities,  and  hence  the  cessation 
of  demand  for  some  commodities,  which  marks  the  de- 
pression of  trade,  is  really  a  cessation  in  the  supply  of 
other  commodities.  That  dealers  find  their  sales  declin- 
ing and  manufacturers  find  orders  falling  off,  while  the 
things  which  they  have  to  sell,  or  stand  ready  to  make, 
are  things  for  which  there  is  yet  a  widespread  desire, 
simply  shows  that  the  supply  of  other  things,  which  in 
the  course  of  trade  would  be  given  for  them,  has  de- 
clined. In  common  parlance  we  say  that  "buyers  have 
no  money,"  or  that  "money  is  becoming  scarce,"  but  in 
talking  in  this  way  we  ignore  the  fact  that  money  is  but 
the  medium  of  exchange.  What  the  would-be  buyers 
really  lack  is  not  money,  but  commodities  which  they 
can  turn  into  money — what  is  really  becoming  scarcer,  is 


Chap.l.  CAUSE  OF  INDUSTKIAL  DEPRESSION.  2ti7 

produce  of  some  sort.  The  diminution  of  the  effective 
demand  of  consumers  is  therefore  but  a  result  of  the 
diminution  of  production. 

This  is  seen  very  clearly  by  storekeepers  in  a  manu- 
facturing town  when  the  mills  are  shut  down  and  opera- 
tives thrown  out  of  work.  It  is  the  cessation  of  produc- 
tion which  deprives  the  operatives  of  means  to  make  the 
purchases  they  desire,  and  thus  leaves  the  storekeeper 
with  what,  in  view  of  the  lessened  demand,  is  a  super- 
abundant stock,  and  forces  him  to  discharge  some  of  his 
clerks  and  otherwise  reduce  his  demands.  And  the  ces- 
sation of  demand  (I  am  speaking,  of  course,  of  general 
cases  and  not  of  any  alteration  in  relative  demand  from 
such  causes  as  change  of  fashion),  which  has  left  the 
manufacturer  with  superabundant  stock  and  compelled 
him  to  discharge  his  hands,  must  arise  in  the  same  way. 
Somewhere,  it  may  be  at  the  other  end  of  the  world,  a 
check  in  production  has  produced  a  check  in  the  demand 
for  consumption.  That  demand  is  lessened  without  want 
being  satisfied,  shows  that  production  is  somewhere 
checked. 

People  want  the  things  the  manufacturer  makes  as 
much  as  ever,  just  as  the  operatives  want  the  things  the 
storekeeper  has  to  sell.  But  they  do  not  have  as  much 
to  give  for  them.  Production  has  somewhere  been 
checked,  and  this  reduction  in  the  supply  of  some  things 
has  shown  itself  in  cessation  of  demand  for  others,  the 
check  propagating  itself  through  the  whole  framework 
of  industry  and  exchange.  Now,  the  industrial  pyramid 
manifestly  rests  on  the  land.  The  primary  and  funda- 
mental occupations,  which  create  a  demand  for  all 
others,  are  evidently  those  which  extract  wealth  from 
nature,  and,  hence,  if  we  trace  from  one  exchange  point 
to  another,  and  from  one  occupation  to  another,  this 
check  to  production,  Avhich  shows  itself  in  decreased 
purchasing  power,  we   must  ultimately  find   it  in  some 


268  THE   PROBLEM   SOLVED.  Booh  V. 

obstacle  which  checks  labor  in  expending  itself  on  land. 
And  that  obstacle,  it  is  clear,  is  the  speculative  advance 
in  rent,  or  the  value  of  land,  which  produces  the  same 
effects,  as  in  fact,  it  is,  a  lock-out  of  labor  and  capital  by 
land  owners.  This  check  to  production,  beginning  at 
the  basis  of  interlaced  industry,  propagates  itself  from 
exchange  point  to  exchange  point,  cessation  of  supply 
becoming  failure  of  demand,  until,  so  to  speak,  the 
whole  machine  is  throAvn  out  of  gear,  and  the  spectacle 
is  everywhere  presented  of  labor  going  to  waste  while 
laborers  suffer  from  want. 

This  strange  and  unnatural  spectacle  of  large  numbers 
of  willing  men  who  cannot  find  employment  is  enough 
to  suggest  the  true  cause  to  whomsoever  can  think  con- 
secutively. For,  though  custom  has  dulled  us  to  it,  it  is 
a  strange  and  unnatural  thing  that  men  who  wish  to  labor, 
in  order  to  satisfy  their  wants,  cannot  find  the  oppor- 
tunity— as,  since  labor  is  that  which  produces  wealth,  the 
man  who  seeks  to  exchange  labor  for  food,  clothing,  or 
any  other  form  of  wealth,  is  like  oue  who  proposes  to 
give  bullion  for  coin,  or  wheat  for  flour.  We  talk  about 
the  supply  of  labor  and  the  demand  for  labor,  but,  evi- 
dently, these  are  only  relative  terms.  The  supply  of 
labor  is  everywhere  the  same — two  hands  always  come 
into  the  world  with  one  mouth,  twenty-one  boys  to  every 
twenty  girls;  and  the  demand  for  labor  must  always 
exist  as  long  as  men  want  things  which  labor  alone  can 
procure.  We  talk  about  the  "want  of  work,"  but,  evi- 
dently, it  is  not  work  that  is  short  while  want  continues; 
evidently,  the  supply  of  labor  cannot  be  too  great,  nor 
the  demand  for  labor  too  small,  when  people  suffer  for 
the  lack  of  things  that  labor  produces.  The  real  trouble 
must  be  that  supply  is  somehow  prevented  from  satisfy- 
ing demand,  that  somewhere  there  is  an  obstacle  which 
prevents  labor  from  producing  the  things  that  laborers 
want. 


Chap.  I.  CAUSE   OF  INDUSTRIAL   DEPRESSION.  269 

Take  the  case  of  any  one  of  these  vast  masses  of  un- 
employed men,  to  whom,  though  he  never  heard  of  Mal- 
thus,  it  to-day  seems  that  there  are  too  many  people  in 
the  world.  In  his  own  wants,  in  the  needs  of  his  anxious 
wife,  in  the  demands  of  his  half-cared-for,  perhaps  even 
hungry  and  shivering  children,  there  is  demand  enough 
for  labor.  Heaven  knows!  In  his  own  willing  hands  is 
the  supply.  Put  him  on  a  solitary  island,  and  though  cut 
oS  from  all  the  enormous  advantages  which  the  co- 
operation, combination,  and  machinery  of  a  civilized 
community  give  to  the  productive  powers  of  man,  yet  his 
two  hands  can  fill  the  mouths  and  keep  warm  the  backs 
that  depend  upon  them.  Yet  where  productive  power  is 
as  its  highest  development  they  cannot.  Why?  Is  it 
not  because  in  the  one  case  he  has  access  to  the  material 
and  forces  of  nature,  and  in  the  other  this  access  is 
denied? 

Is  it  not  the  fact  that  labor  is  thus  shut  off  from 
nature  which  can  alone  explain  the  state  of  things  that 
compels  men  to  stand  idle  who  would  willingly  supply 
their  wants  by  their  labor?  The  proximate  cause  of  en- 
forced idleness  with  one  set  of  men  may  be  the  cessation 
of  demand  on  the  part  of  other  men  for  the  particular 
things  they  produce,  but  trace  this  cause  from  point  to 
point,  from  occupation  to  occupation,  and  you  will  find 
that  enforced  idleness  in  one  trade  is  caused  by  enforced 
idleness  in  another,  and  that  the  paralysis  which  pro- 
daces  dnllness  in  all  trades  cannot  be  said  to  spring  from 
too  great  a  supply  of  labor  or  too  small  a  demand  for 
labor,  but  must  proceed  from  the  fact  that  supply  cannot 
meet  demand  by  producing  the  things  which  satisfy  want 
and  are  the  object  of  labor. 

Xow,  what  is  necessary  to  enable  labor  to  produce 
these  things,  is  land.  When  we  speak  of  labor  creating 
wealth,  we  speak  metaphorically.  Man  creates  nothing. 
The  whole  human  race,  were  they  to  labor  forever,  could 


270  THE    PROBLEM    SOLVED.  Book  V. 

not  create  the  tiniest  mote  that  floats  in  a  sunbeam — 
could  not  make  this  rolling  sphere  one  atom  heavier  or 
one  atom  lighter.  In  producing  wealth,  labor,  with  the 
aid  of  natural  forces,  but  works  up,  into  the  forms  de- 
sired, pre-existing  matter,  and,  to  produce  wealth,  must, 
therefore,  have  access  to  this  matter  and  to  these  forces 
— that  is  to  say,  to  land.  The  land  is  the  source  of  all 
wealth.  It  is  the  mine  from  which  must  be  drawn  the 
ore  that  labor  fashions.  It  is  the  substance  to  which 
labor  gives  the  form.  And,  hence,  when  labor  cannot 
satisfy  its  wants,  may  we  not  with  certainty  infer  that  it 
can  be  from  no  other  cause  than  that  labor  is  denied 
access  to  land? 

When  in  all  trades  there  is  what  we  call  scarcity 
of  employment;  when,  everywhere,  labor  wastes,  while 
desire  is  unsatisfied,  must  not  the  obstacle  which  pre- 
vents labor  from  producing  the  wealth  it  needs,  lie  at 
the  foundation  of  the  industrial  structure?  That  foun- 
dation is  land.  Milliners,  optical  instrument  makers, 
gilders,  and  polishers,  are  not  the  pioneers  of  new  settle- 
ments. Miners  did  not  go  to  California  or  Australia  be- 
cause shoemakers,  tailors,  machinists,  and  printers  were 
there.  But  those  trades  followed  the  miners,  just  as 
they  are  now  following  the  gold  diggers  into  the  Black 
Hills  and  the  diamond  diggers  into  South  Africa.  It  is 
not  the  storekeeper  who  is  the  cause  of  the  farmer,  but 
the  farmer  who  brings  the  storekeeper.  It  is  not  the 
growth  of  the  city  that  develops  the  country,  but  the 
development  of  the  country  that  makes  the  city  grow. 
And,  hence,  when,  through  all  trades,  men  willing  to 
work  cannot  find  opportunity  to  do  so,  the  difficulty 
must  arise  in  the  employment  that  creates  a  demand  for 
all  other  employments — it  must  be  because  labor  is  shut 
out  from  land. 

In  Leeds  or  Lowell,  in  Philadelphia  or  Manchester,  in 
London  or  New  York,  it  may  require  a  grasp  of  first 


Chap.  I.  CAUSE   OF   INDUSTRIAL   DEPRESSION".  271 

principles  to  see  this;  but  where  industrial  development 
has  not  become  so  elaborate,  nor  the  extreme  links  of  the 
chain  so  widely  separated,  one  has  but  to  look  at  obvious 
facts.  Although  not  yet  thirty  years  old,  the  city  of  San 
Francisco,  both  in  population  and  in  commercial  impor- 
tance, ranks  among  the  great  cities  of  the  world,  and, 
next  to  New  York,  is  the  most  metropolitan  of  American 
cities.  Though  not  yet  thirty  years  old,  she  has  had  for 
some  years  an  increasing  number  of  unemployed  men. 
Clearly,  here,  it  is  because  men  cannot  find  employment 
in  the  country  that  there  are  so  many  unemployed  in  the 
city;  for  when  the  harvest  opens  they  go  trooping  out, 
and  when  it  is  over  they  come  trooping  back  to  the  city 
again.  If  these  now  unemployed  men  were  producing 
wealth  from  the  land,  they  would  not  only  be  employing 
themselves,  but  would  be  employing  all  the  mechanics  of 
the  city,  giving  custom  to  the  storekeepers,  trade  to  the 
merchants,  audiences  to  the  theaters,  and  subscribers 
and  advertisements  to  the  newspapers — creating  etfective 
demand  that  would  be  felt  in  New  England  and  Old 
England,  and  wherever  throughout  the  world  come  the 
articles  that,  when  they  have  the  means  to  pay  for  them, 
such  a  population  consumes. 

Now,  why  is  it  that  this  unemployed  labor  cannot 
employ  itself  upon  the  land?  Not  that  the  land  is  all  in 
use.  Though  all  the  symptoms  that  in  older  countries 
are  taken  as  showing  a  redundancy  of  population  are  be- 
ginning to  manifest  themselves  in  San  Francisco,  it  is 
idle  to  talk  of  redundancy  of  population  in  a  State  that 
with  greater  natural  resources  than  France  has  not  yet  a 
million  of  people.  Within  a  few  miles  of  San  Francisco 
is  unused  laud  enough  to  give  employment  to  every  man 
who  wants  it.  -  I  do  not  mean  to  say  tliat  every  unem- 
ployed man  could  turn  farmer  or  build  liimself  a  house, 
if  he  had  the  laud;  but  that  enough  could  and  would  do 


272  THE   PROBLEM  SOLVED.  Book  V. 

SO  to  give  employment  to  the  rest.  What  is  it,  then, 
that  prevents  labor  from  employing  itself  on  this  land? 
Simply,  that  it  has  been  monopolized  and  is  held  at 
speculative  prices,  based  not  upon  present  value,  but 
upon  the  added  value  that  will  come  with  the  future 
growth  of  population. 

What  may  thus  be  seen  in  San  Francisco  by  whoever  is 
willing  to  see,  may,  I  doubt  not,  be  seen  as  clearly  in 
other  places. 

The   present    commercial   and   industrial  depression, 
which  first  clearly  manifested  itself  in  the  United  States 
in  1872,  and  has  spread  with  greater  or  less  intensity  over 
the  civilized  world,  is  largely  attributed  to  the  undue  ex- 
tension of  the  railroad  system,  with  which  there  are  many 
things  that  seem  to  show  its  relation.    I  am  fully  conscious 
that  the  construction  of  railroads  before  they  are  actually 
needed  may  divert  capital  and  labor  from  more  to  less 
productive  employments,  and  make  a  community  poorer 
instead  of  richer;  and  when  the  railroad  mania  was  at  its 
highest,  I  pointed  this  out  in  a  political  tract  addressed 
to  the  people  of  California;*  but  to  assign  to  this  wasting 
of  capital  such  a  widespread  industrial  dead-lock  seems 
to  me  like  attributing  an  unusually  low  tide  to  the  draw- 
ing of  a  few  extra  bucketfuls  of  water.     The  waste  of 
capital  and  labor  during  the  civil  war  was  enormously 
greater  than  it  could  possibly  be  by  the  construction  of 
unnecessary  railroads,  but  without  producing  any  such 
result.     And,  certainly,  there  seems  to  be  little  sense  in 
talking  of  the  waste  of  capital  and  labor  in  railroads  as 
causing  this  depression,  when  the  prominent  feature  of 
the  depression  has  been  the  superabundance  of  capital 
and  labor  seeking  employment. 

Yet,  that  there  is  a  connection  between  the  rapid  con- 

*The  Subsidy  Question  and  the  Democratic  Party,  1871. 


Chap.  I.  CAUSE   OF   INDUSTRIAL   DEPRESSION.  273 

struction  of  railroads  and  industrial  depression,  any  one 
who  understands  what  increased  land  values  mean,  and 
who  has  noticed  the  effect  which  the  construction  of 
railroads  has  upon  land  speculation,  can  easily  see. 
Wherever  a  railroad  was  built  or  projected,  lands  sprang 
up  in  value  under  the  influence  of  speculation,  and  thou- 
sands of  millions  of  dollars  were  added  to  the  nominal 
values  which  capital  and  labor  were  asked  to  pay  out- 
right, or  to  pay  in  installments,  as  the  price  of  being 
allowed  to  go  to  work  and  produce  wealth.  The  in- 
evitable result  was  to  check  production,  and  this  check 
to  production  propagated  itself  in  a  cessation  of  demand, 
which  checked  production  to  the  furthest  verge  of  the 
wide  circle  of  exchanges,  operating  with  accumulated 
force  in  the  centers  of  the  great  industrial  commonwealth 
into  which  commerce  links  the  civilized  world. 

The  primary  operations  of  this  cause  can,  perhaps,  be 
nowhere  more  clearly  traced  than  in  California,  which, 
from  its  comparative  isolation,  has  constituted  a  pecul- 
iarly well-defined  community. 

Until  almost  its  close,  the  last  decade  was  marked  in 
California  by  the  same  industrial  activity  which  was 
shown  in  the  Northern  States,  and,  in  fact,  throughout 
the  civilized  world,  when  the  interruption  of  exchanges 
and  the  disarrangement  of  industry  caused  by  the  war 
and  the  blockade  of  Southern  ports  is  considered.  This 
activity  could  not  be  attributed  to  inflation  of  the  cur- 
rency or  to  lavish  expenditures  of  the  General  Govern- 
ment, to  which  in  the  Eastern  States  the  comparative 
activity  of  the  same  period  has  since  been  attributed; 
for,  in  spite  of  legal  tender  laws,  the  Pacific  Coast  adhered 
to  a  coin  currency,  and  the  taxation  of  the  Federal  Gov- 
ernment took  away  very  much  more  than  was  returned 
in  Federal  expenditures.  It  was  attributable  solely  to 
normal  causes,  for,  though  placer  mining  was  declining, 
the  Nevada  silver  mines  were  being  opened,  wheat  and 


274  THE   PROBLEM   SOLVED.  Book  V. 

wool  were  beginning  to  take  the  place  of  gold  in  the 
table  of  exports,  and  an  increasing  population  and  the 
improvement  in  the  methods  of  production  and  exchange 
were  steadily  adding  to  the  efficiency  of  labor. 

With  this  material  progress  went  on  a  steady  enhance- 
ment in  land  values — its  consequence.  This  steady 
advance  engendered  a  speculative  advance,  which,  with 
the  railroad  era,  ran  up  land  values  in  every  direction. 
If  the  population  of  California  had  steadily  grown  when 
the  long,  costly,  fever-haunted  Isthmus  route  was  the 
principal  mode  of  communication  with  the  Atlantic 
States,  it  must,  it  was  thought,  increase  enormously  with 
the  opening  of  a  road  which  would  bring  New  York 
harbor  and  San  Francisco  Bay  within  seven  days'  easy 
travel,  and  when  in  the  State  itself  the  locomotive  took 
the  place  of  stage  coach  and  freight  wagon.  The  ex- 
pected increase  of  land  values  which  would  thus  accrue 
was  discounted  in  advance.  Lots  on  the  outskirts  of 
San  Francisco  rose  hundreds  and  thousands  per  cent., 
and  farming  land  was  taken  up  and  held  for  high  prices, 
in  whichever  direction  an  immigrant  was  likely  to  go. 

But  the  anticipated  rush  of  immigrants  did  not  take 
place.  Labor  and  capital  could  not  pay  so  much  for 
land  and  make  fair  returns.  Production  was  checked, 
if  not  absolutely,  at  least  relatively.  As  the  transcon- 
tinental railroad  approached  completion,  instead  of  in- 
creased activity  symptoms  of  depression  began  to  mani- 
fest themselves;  and,  when  it  was  completed,  to  the 
season  of  activity  had  succeeded  a  period  of  depression 
which  has  not  since  been  fully  recovered  from,  during 
which  wages  and  interest  have  steadily  fallen.  What  I 
have  called  the  actual  rent  line,  or  margin  of  cultivation, 
is  thus  (as  well  as  by  the  steady  march  of  improvement 
and  increase  of  population,  which,  though  slower" than  it 
otherwise  would  have  been,  still  goes  on)  approaching 
the  speculative  rent  line,  but  the  tenacity  with  which  a 


Chap.  I.  CAUSE   OF   IN-DUSTRIAL    DEPRESSION.  275 

speculative  advance  in  the  price  of  land  is  maintained  in 
a  developing  community  is  well  known.* 

Now,  what  thus  went  on  in  California  went  on  in  every 
progressive  section  of  the  Union.  Everywhere  that  a 
railroad  was  built  or  projected,  land  was  monopolized  in 
anticipation,  and  the  benefit  of  the  improvement  was 
discounted  in  increased  land  values.  The  speculative 
advance  in  rent  thus  outrunning  the  normal  advance, 
production  was  checked,  demand  was  decreased,  and 
labor  and  capital  were  turned  back  from  occupations 
more  directly  concerned  with  land,  to  glut  those  in 
which  the  value  of  land  is  a  less  perceptible  element.  It 
is  thus  that  the  rapid  extension  of  railroads  is  related  to 
the  succeeding  depression. 

And  what  went  on  in  the  United  States  went  on  in  a 
greater  or  less  obvious  degree  all  over  the  progressive 
world.  Everywhere  land  values  have  been  steadily  in- 
creasing with  material  progress,  and  everywhere  this 
increase  begot  a  speculative  advance.  The  impulse  of 
the  primary  cause  not  only  radiated  from  the  newer  sec- 
tions of  the  Union  to  the  older  sections,  and  from  the 
United  States  to  Europe,  but  everywhere  the  primary 
cause  was  acting.  And,  hence,  a  world-wide  depression 
of  industry  and  commerce,  begotten  of  a  world-wid-e 
material  progress. 

There  is  one  thing  which,  it  may  seem,  I  have  over- 
looked, in  attributing  these  industrial  depressions  to  the 
speculative  advance  of  rent  or  land  values  as  a  main  and 

*It  is  astonishing  how  in  a  new  country  of  great  expectations 
speculative  prices  of  land  will  be  kept  up.  It  is  common  to  hear  the 
expression,  "There  is  no  market  for  real  estate;  you  cannot  sell  it  at 
any  price,"  and  yet,  at  the  same  time,  if  you  goto  buy  it,  unless  you 
find  somebody  who  is  absolutely  compelled  to  sell,  you  must  pay 
the  prices  that  prevailed  when  speculation  ran  high.  For  owners, 
believing  that  land  values  must  ultimately  advance,  hold  on  as  long 
as  they  can. 


276  THE  PROBLEM  SOLVED.  Book  V. 

primary  cause.  The  operation  of  such  a  cause,  though 
it  may  be  rapid,  must  be  progressive — resembling  a  pres- 
sure, not  a  blow.  But  these  industrial  depressions  seem 
to  come  suddenly — they  have,  at  their  beginning,  the 
character  of  a  paroxysm,  followed  by  a  comparative 
lethargy,  as  if  of  exhaustion.  Everything  seems  to  be 
going  on  as  usual,  commerce  and  industry  vigorous  and 
expanding,  when  suddenly  there  comes  a  shock,  as  of  a 
thunderbolt  out  of  a  clear  sky — a  bank  breaks,  a  great 
manufacturer  or  merchant  fails,  and,  as  if  a  blow  had 
thrilled  through  the  entire  industrial  organization,  fail- 
ure succeeds  failure,  and  on  every  side  workmen  are 
discharged  from  employment,  and  capital  shrinks  into 
profitless  security. 

Let  me  explain  what  I  think  to  be  the  reason  of  this: 
To  do  so,  we  must  take  into  account  the  manner  in 
which  exchanges  are  made,  for  it  is  by  exchanges  that  all 
the  varied  forms  of  industry  are  linked  together  into  one 
mutually  related  and  interdependent  organization.  To 
enable  exchanges  to  be  made  between  producers  far  re- 
moved by  space  and  time,  large  stocks  must  be  kept  in 
store  and  in  transit,  and  this,  as  I  have  already  explained, 
I  take  to  be  the  great  function  of  capital,  in  addition  to 
that  of  supplying  tools  and  seed.  These  exchanges  are, 
perhaps  necessarily,  largely  made  upon  credit — that  is  to 
say,  the  advance  upon  one  side  is  made  before  the  return 
is  received  on  the  other. 

Now,  without  stopping  to  inquire  as  to  the  causes,  it  is 
manifest  that  these  advances  are,  as  a  rule,  from  the 
more  highly  organized  and  later  developed  industries  to 
the  more  fundamental.  The  West  Coast  African,  for 
instance,  who  exchanges  palm  oil  and  cocoanuts  for 
gaudy  calico  and  Birmingham  idols,  gets  his  return  im- 
mediately; the  English  merchant,  on  the  contrary,  has 
to  lay  out  of  his  goods  a  long  while  before  he  gets  his 
returns.     The  farmer  can  sell  his  crop  as  soon  as  it  is 


Chap.  I.  CAUSE   OF   INDUSTRIAL   DEPRESSION.  277 

harvested,  and  for  cash;  the  great  manufacturer  must 
keep  a  large  stock,  send  his  goods  long  distances  to 
agents,  and,  generally,  sell  on  time.  Thus,  as  advances 
and  credits  are  generally  from  what  we  may  call  the  sec- 
ondary, to  what  we  may  call  the  primary  industries,  it 
follows  that  any  check  to  production  which  proceeds 
from  the  latter  will  not  immediately  manifest  itself  in 
the  former.  The  system  of  advances  and  credits  consti- 
tutes, as  it  were,  an  elastic  connection,  which  will  give 
considerably  before  breaking,  but  which,  when  it  breaks, 
will  break  with  a  snap. 

Or,  to  illustrate  in  another  way  what  I  mean:  The  great 
pyramid  of  Gizeh  is  com^posed  of  layers  of  masonry,  the 
bottom  layer,  of  course,  supporting  all  the  rest.  Could 
we  by  some  means  gradually  contract  this  bottom  layer, 
the  upper  part  of  the  pyramid  would  for  some  time 
retain  its  form,  and  then,  when  gravitation  at  length 
overcame  the  adhesiveness  of  the  material,  would  not 
diminish  gradually  and  regularly,  but  would  break  olf 
suddenly,  in  large  pieces.  Now,  the  industrial  organiza- 
tion may  be  likened  to  such  a  pyramid.  What  is  the 
proportion  which  in  a  given  stage  of  social  development 
the  various  industries  bear  to  each  other,  it  is  difficult, 
and  perhaps  impossible,  to  say;  but  it  is  obvious  that 
there  is  such  a  proportion,  just  as  in  a  printer's  font  of 
type  there  is  a  certain  proportion  between  the  various 
letters.  Each  form  of  industry,  as  it  is  developed  by 
division  of  labor,  springs  from  and  rises  out  of  the  others, 
and  all  rest  ultimately  upon  land;  for,  without  land, 
labor  is  as  impotent  as  would  be  a  man  in  void  space. 
To  make  the  illustration  closer  to  the  condition  of  a 
progressive  country,  imagine  a  pyramid  composed  of  su- 
perimposed layers— the  whole  constantly  growing  and 
expanding.  Imagine  the  growth  of  the  layer  nearest  the 
ground  to  be  checked.  The  others  will  for  a  time  keep 
on  expanding— in  fact,  for  the  moment,  the  tendency 


378  THE   PROBLEM  SOLVED.  Booh  V. 

will  be  to  quicker  expansion,  for  the  vital  force  which  is 
refused  scope  on  the  ground  layer  will  strive  to  find  vent 
in  those  above— until,  at  length,  there  is  a  decided  over- 
balance and  a  sudden  crumbling  along  all  the  faces  of 
the  pyramid. 

That  the  main  cause  and  general  course  of  the  recur- 
ring paroxysms  of  industrial  depression,  which  are  becom- 
ing so  marked  a  feature  of  modern  social  life,  are  thus  ex- 
plained, is,  1  think,  clear.  And  let  the  reader  remember 
that  it  is  only  the  main  causes  and  general  courses  of 
such  phenomena  that  we  are  seeking  to  trace  or  that,  in 
fact,  it  is  possible  to  trace  with  any  exactness.  Political 
economy  can  deal,  and  has  need  to  deal,  only  with 
general  tendencies.  The  derivative  forces  are  so  multi- 
form, the  actions  and  reactions  are  so  various,  that  the 
exact  character  of  the  phenomena  cannot  be  predicted. 
We  know  that  if  a  tree  is  cut  through  it  will  fall,  but 
precisely  in  what  direction  will  be  determined  by  the  in- 
clination of  the  trunk,  the  spread  of  the  branches,  the 
impact  of  the  blows,  the  quarter  and  force  of  the  wind; 
and  even  a  bird  lighting  on  a  twig,  or  a  frightened 
squirrel  leaping  from  bough  to  bough,  will  not  be  with- 
out its  influence.  We  know  that  an  insult  will  arouse  a 
feeling  of  resentment  in  the  human  breast,  but  to  say  how 
far  and  in  what  way  it  will  manifest  itself,  would  require 
a  synthesis  which  would  build  up  the  entire  man  and  all 
his  surroundings,  past  and  present. 

The  manner  in  which  the  sufficient  cause  to  which  I 
have  traced  them  explains  the  main  features  of  these  in- 
dustrial depressions  is  in  striking  contrast  with  the  con- 
tradictory and  self-contradictory  attempts  Avhich  have 
been  made  to  explain  them  on  the  current  theories  of  the 
distribution  of  wealth.  That  a  speculative  advance  in 
rent  or  land  values  invariably  precedes  each  of  these  sea 
sons  of  industrial  depression  is  everywhere  clear.  That 
they  bear  to  each  other  the  relations  of  cause  and  effect. 


Chap.  I.  CAUSE   OF   INDUSTEIAL   DEPRESSION.  279 

is  obvious  to  whomsoever  considers  the  necessary  rela- 
tions between  land  and  labor. 

And  that  the  present  depression  is  running  its  course, 
and  that,  in  the  manner  previously  indicated,  a  new 
equilibrium  is  being  established,  which  will  result  in 
another  season  of  comparative  activity,  may  already  be 
seen  in  the  United  States.  The  normal  rent  line  and  the 
speculative  rent  line  are  being  brought  together:  (1)  By 
the  fall  in  speculative  land  values,  which  is  very  evident 
in  the  reduction  of  rents  and  shrinkage  of  real  estate 
values  in  the  principal  cities.  (2)  By  the  increased  effi- 
ciency of  labor,  arising  from  the  growth  of  jiopulation  and 
the  utilization  of  new  inventions  and  discoveries,  some  of 
which  almost  as  important  as  that  of  the  use  of  steam  we 
seem  to  be  on  the  verge  of  grasping.  (3)  By  the  lower- 
ing of  the  habitual  standard  of  interest  and  wages,  which, 
as  to  interest,  is  shown  by  the  negotiation  of  a  govern- 
ment loan  at  four  per  cent.,  and  as  to  wages  is  too  gen- 
erally evident  for  any  special  citation.  When  the  equi- 
librium is  thus  re-established,  a  season  of  renewed  activ- 
ity, culminating  in  a  speculative  advance  of  land  values 
will  set  in.*  But  wages  and  interest  will  not  recover 
their  lost  ground.  The  net  result  of  all  these  perturba- 
tions or  wave-like  movements  is  the  gradual  forcing  of 
wages  and  interest  toward  their  minimum.  These  tern- 
porary  and  recurring  depressions  exhibit,  in  fact,  as  was 
noticed  in  the  opening  chapter,  but  intensifications  of 
the  general  movement  which  accompanies  material 
progress. 

*  This  was  written  a  year  ago.  It  is  now  (July,  1879)  evident  that 
a  new  period  of  activity  has  commenced,  as  above  predicted,  and  in 
New  York  and  Chicago  real  estate  prices  have  already  begun  to  re- 
cover. 


CHAPTER  II. 

THE  PEESISTEXCE  OF  POVERTY  AMID  ADVANCING  WEALTH. 

The  great  problem,  of  -which  these  recurring  seasons 
of  industrial  depression  are  but  peculiar  manifestations, 
is  now,  I  think,  fully  solved,  and  the  social  phenomena 
which  all  over  the  civilized  world  appall  the  philanthro- 
pist and  perplex  the  statesman,  which  hang  with  clouds 
the  future  of  the  most  advanced  races,  and  suggest 
doubts  of  the  reality  and  ultimate  goal  of  what  we  have 
fondly  called  progress,  are  now  explained. 

The  reasofi  v)1iy,  in  spite  of  the  increase  of  productive 
poiver,  wages  constantly  tend  to  a  miiiimum  which  ivill give 
but  a  hare  living,  is  that,  with  increase  in  productive  power, 
rent  tends  to  even  greater  increase,  thus  producing  a  con- 
stant tendency  to  the  forcing  doion  of  vmges. 

In  every  direction,  the  direct  tendency  of  advancing 
civilization  is  to  increase  the  power  of  human  labor  to 
satisfy  human  desires — to  extirpate  poverty,  and  to  ban- 
ish want  and  the  fear  of  want.  All  the  things  in  which 
progress  consists,  all  the  conditions  which  progressive 
communities  are  striving  for,  have  for  their  direct  and 
natural  result  the  improvement  of  the  material  (and  con- 
sequently the  intellectual  and  moral)  condition  of  all 
within  their  influence.  The  growth  of  population,  the 
increase  and  extension  of  exchanges,  the  discoveries  of 
science,  the  march  of  invention,  the  spread  of  education, 
the  improvement  of  government,  and  the  amelioration  of 
manners,  considered  as  material  forces,  have  all  a  direct 
tendency  to  increase  the  productive  power  of  labor — not 


Chap.  n.  THE    PERSTSTEN-CE   OF   POVERTY.  281 

of  some  labor,  but  of  all  labor;  not  in  some  departments 
of  industry,  but  in  all  departments  of  industry;  for  the 
law  of  the  production  of  wealth  in  society  is  the  law  of 
"each  for  all,  and  all  for  each." 

But  labor  cannot  reap  the  benefits  which  advancing 
civilization  thus  brings,  because  they  are  intercepted. 
Land  being  necessary  to  labor,  and  being  reduced  to 
private  ownership,  every  increase  in  the  productive  power 
of  labor  but  increases  rent — the  price  that  labor  must  pay 
for  the  opportunity  to  utilize  its  powers;  and  thus  all 
the  advantages  gained  by  the  march  of  progress  go  to  the 
owners  of  land,  and  wages  do  not  increase,  Wa^es  can- 
not  increase;  for  the  greater  the  earnings  of  labor  the 
greater  the  price  that  labor  must  pay  out  of  its  earnings 
for  the  opportunity  to  make  any  earnings  at  all.  The 
mere  laborer  has  thus  no  more  interest  in  the  general 
advance  of  productive  power  than  the  Cuban  slave  has  in 
advance  in  the  price  of  sugar.  And  just  as  an  advance 
in  'the  price  of  sugar  may  make  the  condition  of  the 
slave  worse,  by  inducing  the  master  to  drive  him  harder, 
so  may  the  condition  of  the  free  laborer  be  positively,  as 
well  as  relatively,  changed  for  the  worse  by  the  increase 
in  the  productive  power  of  his  labor.  For,  begotten  of 
the  continuous  advance  of  rents,  arises  a  speculative 
tendency  which  discounts  the  effect  of  future  improve- 
ments by  a  still  further  advance  of  rent,  and  thus  tends, 
where  this  has  not  occurred  from  the  normal  advance  of 
rent,  to  drive  wages  down  to  the  slave  point — tho  point 
at  which  the  laborer  can  just  live. 

And  thus  robbed  of  all  the  benefits  of  the  increase  in 
productive  power,  labor  is  exposed  to  certain  effects  of 
advancing  civilization  which,  without  tho  advantages 
that  naturally  accompany  them,  arc  positive  evils,  and  of 
themselves  tend  to  reduce  tho  free  laborer  to  the  helpless 
and  degraded  condition  of  the  slave. 

For  all  improvements  which  add  to  productive  power  as 


283  THE   PEOELEM  SOLVED.  Book  V. 

civilization  advances  consist  in,  or  necessitate,  a  still  fur- 
ther subdivision  of  labor,  and  the  efficiency  of  the  whole 
body  of  laborers  is  increased  at  the  expense  of  the  inde- 
pendence of  the  constituents.  The  individual  laborer 
acquires  knowledge  of  and  skill  in  but  an  infinitesimal 
part  of  the  varied  processes  which  are  required  to  supply 
even  the  commonest  wants.  The  aggregate  produce  of 
the  labor  of  a  savage  tribe  is  small,  but  each  member  is 
capable  of  an  independent  life.  He  can  build  his  own 
habitation,  hew  out  or  stitch  together  his  own  canoe, 
make  his  own  clothing,  manufacture  his  own  weapons, 
snares,  tools  and  ornaments.  He  has  all  the  knowledge 
of  nature  possessed  by  his  tribe—knows  what  vegetable 
productions  are  fit  for  food,  and  where  they  may  be 
found;  knows  the  habits  and  resorts  of  beasts,  birds, 
fishes,  and  insects;  can  pilot  himself  by  the  sun  or  the 
stars,  by  the  turning  of  blossoms  or  the  mosses  on  the 
trees;  is,  in  short,  capable  of  supplying  all  his  wants. 
He  may  be  cut  off  from  his  fellows  and  still  live;  and 
thus  possesses  an  independent  power  which  makes  him  a 
free  contracting  party  in  his  relations  to  the  community 
of  which  he  is  a  member. 

Compare  with  this  savage  the  laborer  in  the  lowest 
ranks  of  civilized  society,  whose  life  is  spent  in  pro- 
ducing but  one  thing,  or  oftener  but  the  infinitesimal 
part  of  one  thing,  out  of  the  multiplicity  of  things  that 
constitute  the  wealth  of  society  and  go  to  supply  even 
the  most  primitive  wants;  who  not  only  cannot  make 
even  the  tools  required  for  his  work,  but  often  works 
with  tools  that  he  does  not  own,  and  can  never  hope  to 
own.  Compelled  to  even  closer  and  more  continuous 
labor  than  the  savage,  and  gaining  by  it  no  more  than 
the  savage  gets — the  mere  necessaries  of  life — he  loses 
the  independence  of  the  savage.  He  is  not  only  unable 
to  apply  his  own  powers  to  the  direct  satisfaction  of  his 
own  wants,  but,  without  the  concurrence  of  many  others. 


Chap.  II.  THE    PERSISTENCE   OF   POVERTY.  283 

he  is  unable  to  apply  them  indirectly  to  the  satisfaction 
of  his  wants.  He  is  a  mere  link  in  an  enormous  chain  of 
producers  and  consumers,  helpless  to  separate  himself, 
and  helpless  to  move,  except  as  they  move.  The  worse 
his  position  in  society,  the  more  dependent  is  he  on  soci- 
ety; the  more  utterly  unable  does  he  become  to  do  any- 
thing for  himself.  The  very  power  of  exerting  his  labor 
for  the  satisfaction  of  his  wants  passes  from  his  own  con- 
trol, and  may  be  taken  away  or  restored  by  the  actions 
of  others,  or  by  general  causes  over  which  he  has  no  more 
influence  than  he  has  over  the  motions  of  the  solar  sys- 
tem. The  primeval  curse  comes  to  be  looked  upon  as  a 
boon,  and  men  think,  and  talk,  and  clamor,  and  legislate 
as  though  monotonous  manual  labor  in  itself  were  a  good 
and  not  an  evil,  an  end  and  not  a  means.  Under  such 
circumstances,  the  man  loses  the  essential  quality  of 
manhood — the  godlike  power  of  modifying  and  control- 
ling conditions.  He  becomes  a  slave,  a  machine,  a  com- 
modity— a  thing,  in  some  respects,  lower  than  the 
animal. 

I  am  no  sentimental  admirer  of  the  savage  state.  I  do 
not  get  my  ideas  of  the  untutored  children  of  nature 
from  Rousseau,  or  Chateaubriand,  or  Cooper.  I  am  con- 
scious of  its  material  and  mental  poverty,  and  its  low  and 
narrow  range.  I  believe  that  civilization  is  not  only  the 
natural  destiny  of  man,  but  the  enfranchisement,  eleva- 
tion, and  refinement  of  all  his  j)owers,  and  think  that  it 
is  only  in  such  moods  as  may  lead  him  to  envy  the  cud- 
chewing  cattle,  that  a  man  who  is  free  to  the  advantages 
of  civilization  could  look  with  regret  upon  the  savage 
state.  But,  nevertheless,  I  think  no  one  Avho  will  open 
his  eyes  to  the  facts  can  resist  the  conclusion  that  there 
are  in  the  heart  of  our  civilization  large  classes  with 
whom  the  veriest  savage  could  not  afford  to  exchange. 
It  is  my  deliberate  opinion  that  if,  standing  on  the 
threshold  of  being,  one  were  given  the  choice  of  entering 


284  THE    PROBLEM    SOLVED.  Book  V. 

life  as  a  Tierra  del  Fuegan,  a  black  fellow  of  Australia, 
an  Esquimaux  in  the  Arctic  Circle,  or  among  the  lowest 
classes  in  such  a  highly  civilized  country  as  Great  Brit- 
ain, he  would  make  infinitely  the  better  choice  in  select- 
ing the  lot  of  the  savage.  For  those  classes  who  in  the 
midst  of  wealth  are  condemned  to  want  suffer  all  the 
privations  of  the  savage,  without  his  sense  of  personal 
freedom;  they  are  condemned  to  more  than  his  narrow- 
ness and  littleness,  without  opportunity  for  the  growth 
of  his  rude  virtues;  if  their  horizon  is  wider,  it  is  but  to 
reveal  blessings  that  they  cannot  enjoy. 

There  are  some  to  whom  this  may  seem  like  exaggera- 
tion, but  it  is  only  because  they  have  never  suffered 
themselves  to  realize  the  true  condition  of  those  classes 
upon  whom  the  fron  heel  of  modern  civilization  presses 
with  full  force.  As  De  Tocqueville  observes,  in  one  of 
his  letters  to  Mme.  Swetchine,  "we  so  soon  become  used 
to  the  thought  of  want  that  we  do  not  feel  that  an  evil 
which  grows  greater  to  the  sufferer  the  longer  it  lasts  be- 
comes less  to  the  observer  by  the  very  fact  of  its  dura- 
tion;" and  perhaps  the  best  proof  of  the  justice  of  this 
observation  is  that  in  cities  where  there  exists  a  pauper 
class  and  a  criminal  class,  where  young  girls  shiver  as 
they  sew  for  bread,  and  tattered  and  barefooted  children 
make  a  home  in  the  streets,  money  is  regularly  raised  to 
send  missionaries  to  the  heathen!  Send  missionaries  to 
the  heathen!  it  would  be  laughable  if  it  were  not  so  sad. 
Baal  no  longer  stretches  forth  his  hideous,  sloping  arms; 
but  in  Christian  lands  mothers  slay  their  infants  for  a 
burial  fee!  And  I  challenge  the  production  from  any 
authentic  accounts  of  savage  life  of  such  descriptions  of 
degradation  as  are  to  be  found  in  official  documents  of 
highly  civilized  countries — in  reports  of  Sanitary  Com- 
missioners and  of  inquiries  into  the  condition  of  the 
laboring  poor. 

The  simple  theory  which  I  have  outlined  (if  indeed  it 


Chap.U.  THE    PERSISTENCE   OF    POVERTY.     "  285 

can  be  called  a  theory  which  is  but  the  recognition  of  the 
most  obvious  relations)  explains  this  conjunction  of  pov- 
erty with  wealth,  of  low  wages  with  high  productive 
power,  of  degradation  amid  enlightenment,  of  virtual 
slavery  in  political  liberty.  It  harmonizes,  as  results 
flowing  from  a  general  and  inexorable  law,  facts  other- 
wise most  perplexing,  and  exhibits  the  sequence  and  re- 
lation between  phenomena  that  without  reference  to  it 
are  diverse  and  contradictory.  It  explains  why  interest 
and  wages  are  higher  in  new  than  in  older  communities, 
though  the  average,  as  well  as  the  aggregate,  production 
of  wealth  is  less.  It  explains  why  improvements  which 
increase  the  productive  power  of  labor  and  capital  in- 
crease the  reward  of  neither.  It  explains  what  is  com- 
monly called  the  conflict  between  labor  and  capital,  while 
proving  the  real  harmony  of  interest  between  them.  It 
cuts  the  last  inch  of  ground  from  under  the  fallacies  of 
protection,  while  showing  why  free  trade  fails  to  benefit 
permanently  the  working  classes.  It  explains  why  want 
increases  with  abundance,  and  wealth  tends  to  greater 
and  greater  aggregations.  It  explains  the  periodically 
recurring  depressions  of  industry  without  recourse  either 
to  the  absurdity  of  "over-production"  or  the  absurdity 
of  "over-consumption."  It  explains  the  enforced  idle- 
ness of  large  numbers  of  would-be  producers,  which 
wastes  the  productive  force  of  advanced  communities, 
without  the  absurd  assumption  that  there  is  too  little 
work  to  do  or  that  there  are  too  many  to  do  it.  It  ex- 
plains the  ill  effects  upon  the  laboring  classes  which 
often  follow  the  introduction  of  machinery,  without 
denying  the  natural  advantages  which  the  use  of  ma- 
chinery gives.  It  explains  the  vice  and  misery  which 
show  themselves  amid  dense  population,  Avithout  at- 
tributing to  the  laws  of  the  All-Wise  and  All-Beneficent 
defects  which  belong  only  to  the  short-sighted  and  selfish 
enactments  of  men. 


286  THE   PROBLEM   SOLVED.  Book  V. 

This  explanation  is  in  accordance  with  all  the  facts. 

Look  over  the  world  to-day.  In  countries  the  most 
widely  differing — ^under  conditions  the  most  diverse  as  to 
government,  as  to  industries,  as  to  tariffs,  as  to  currency 
— you  will  find  distress  among  the  working  classes;  but 
everywhere  that  you  thus  find  distress  and  destitution  in 
the  midst  of  wealth  you  will  find  that  the  land  is  monop- 
olized; that  instead  of  being  treated  as  the  common 
property  of  the  whole  people,  it  is  treated  as  the  private 
property  of  individuals;  that,  for  its  use  by  labor,  large 
revenues  are  extorted  from  the  earnings  of  labor.  Look 
over  the  world  to-day,  comparing  different  countries  with 
each  other,  and  you  will  see  that  it  is  not  the  abundance 
of  capital  or  the  productiveness  of  labor  that  makes 
wages  high  or  low;  but  the  extent  to  Avhich  the  monopo- 
lizers of  land  can,  in  rent,  levy  tribute  upon  the  earnings 
of  labor.  Is  it  not  a  notorious  fact,  known  to  the  most 
ignorant,  that  new  countries,  where  the  aggregate  wealth 
is  small,  but  where  land  is  cheap,  are  always  better  coun- 
tries for  the  laboring  classes  than  the  rich  countries, 
where  land  is  dear?  Wherever  you  find  land  relatively 
low,  will  you  not  find  wages  relatively  high?  And 
wherever  land  is  high,  will  you  not  find  wages  low?  As 
land  increases  in  value,  poverty  deepens  and  pauperism 
appears.  In  the  new  settlements,  where  land  is  cheap, 
you  will  find  no  beggars,  and  the  inequalities  in  condi- 
tion are  very  slight.  In  the  great  cities,  where  land  is 
so  valuable  that  it  is  measured  by  the  foot,  you  will  find 
the  extremes  of  poverty  and  of  luxury.  And  this  dis- 
parity in  condition  between  the  two  extremes  of  the  social 
scale  may  always  be  measured  by  the  price  of  land. 
Land  in  New  York  is  more  valuable  than  in  San  Fran- 
cisco; and  in  New  York,  the  San  Franciscan  may  see 
squalor  and  misery  that  will  make  him  stand  aghast. 
Land  is  more  valuable  in  London  than   in  New  York; 


Chap.  II.  THE    PERSISTENCE    OF    POVERTY.  287 

and  in  Loudon,  there  is  squalor  and  destitution  worse 
than  that  of  New  York. 

Compare  the  same  country  in  different  times,  and  the 
same  relation  is  obvious.  As  the  result  of  much  investi- 
gation, Hallam  says  he  is  convinced  that  the  wages  of 
manual  labor  were  greater  in  amount  in  England  during 
the  middle  ages  than  they  are  now.  Whether  this  is  so 
or  not,  it  is  evident  that  they  could  not  have  been  much, 
if  any,  less.  The  enormous  increase  in  the  efficiency  of 
labor,  which  even  in  agriculture  is  estimated  at  seven  or 
eight  hundred  per  cent.,  and  in  many  branches  of  indus- 
try is  almost  incalculable,  has  only  added  to  rent.  The 
rent  of  agricultural  laud  in  England  is  now,  according  to 
Professor  Kogers,  120  times  as  great,  measured  in 
money,  as  it  was  500  years  ago,  and  14  times  as  great, 
measured  in  wheat;  while  in  the  rent  of  building  land, 
and  mineral  land,  the  advance  has  been  enormously 
greater.  According  to  the  estimate  of  Professor  Faw- 
cett,  the  capitalized  rental  value  of  the  land  of  England 
now  amounts  to  £4,500,000,000,  or  $21,870,000,000— that 
is  to  say,  a  few  thousand  of  the  people  of  England  hold  a 
lien  upon  the  labor  of  the  rest,  the  capitalized  value  of 
which  is  more  than  twice  as  great  as,  at  the  average  price 
of  Southern  negroes  in  1860  would  be  the  value  of  her 
whole  population  were  they  slaves. 

In  Belgium  and  Flanders,  in  France  and  Germany,  the 
rent  and  selling  price  of  agricultural  land  have  doubled 
within  the  last  thirty  years.*  In  short,  increased  power 
of  production  has  everywhere  added  to  the  value  of  land; 
nowhere  has  it  added  to  the  value  of  labor;  for  though 
actual  wages  may  in  some  places  have  somewhat  risen,  the 
rise  is  clearly  attributable  to  other  causes.  In  more 
places  they  have  fallen— that  is,  where  it  has  been  pos- 
sible for  them  to  fall— for  there  is  a  minimum   below 

*  Systems  of  Land  Tenure,  published  by  the  Cobden  Club. 


288  THE   PROBLEM   SOLVED.  Book  V. 

which  laborers  cannot  keep  up  their  numbers.  And, 
everywhere,  wages,  as  a  proportion  of  the  produce,  have 
decreased. 

How  the  Black  Death  brought  about  the  great  rise  of 
wages  in  England  in  the  Fourteenth  Century  is  clearly 
discernible,  in  the  efEorts  of  the  land  holders  to  regulate 
wages  by  statute.  That  that  awful  reduction  in  popula- 
tion, instead  of  increasing,  really  reduced  the  effective 
power  of  labor,  there  can  be  no  doubt;  but  the  lessening 
of  competition  for  land  still  more  greatly  reduced  rent, 
and  wages  advanced  so  largely  that  force  and  penal  laws 
were  called  in  to  keep  them  down.  The  reverse  effect 
followed  the  monopolization  of  land  that  went  on  in 
England  during  the  reign  of  Henry  VIII.,  in  the  inclo- 
sure  of  commons  and  the  division  of  the  church  lands 
between  the  panders  and  parasites  who  were  thus  en- 
abled to  found  noble  families.  The  result  was  the  same 
as  that  to  which  a  speculative  increase  in  land  values 
tends.  According  to  Malthus  (who,  in  his  "Principles  of 
Political  Economy,"  mentions  the  fact  without  connect- 
ing it  with  land  tenures),  in  the  reign  of  Henry  VII., 
half  a  bushel  of  wheat  would  purchase  but  little  more 
than  a  day's  common  labor,  but  in  the  latter  part  of  the 
reign  of  Elizabeth,  half  a  bushel  of  wheat  would  purchase 
three  days'  common  labor.  I  can  hardly  believe  that  the 
reduction  in  wages  could  have  been  so  great  as  this  com- 
parison would  indicate;  but  that  there  was  a  reduction  in 
common  wages,  and  great  distress  among  the  laboring 
classes,  is  evident  from  the  complaints  of  '^sturdy 
vagrants"  and  the  statutes  made  to  suppress  them.  The 
rapid  monopolization  of  the  land,  the  carrying  of  the 
speculative  rent  line  beyond  the  normal  rent  line,  pro- 
duced tramps  and  paupers,  just  as  like  effects  from  like 
causes  have  lately  been  evident  in  the  United  States. 

"Land  which  went  heretofore  for  twenty  or  forty 
pounds  a  year,"  said  Hugh  Latimer,  "now  is  let  for  fifty 


Chap.n.  THE    PERSISTENCE   OF    POVERTY.  289 

or  a  hundred.  My  father  was  a  yeoman,  and  had  no 
lands  of  his  own;  only  he  had  a  farm  at  a  rent  of  three  or 
four  pounds  by  the  year  at  the  uttermost,  and  thereupon 
he  tilled  so  much  as  kept  half  a  dozen  men.  He  had 
walk  for  a  hundred  sheep,  and  my  mother  milked  thirty 
kine;  he  was  able  and  did  find  the  King  a  harness  with 
himself  and  his  horse  when  he  came  to  the  place  that  he 
should  receive  the  King's  wages.  I  can  remember  that  I 
buckled  his  harness  when  he  went  to  Blackheath  Field. 
He  kept  me  to  school;  he  married  my  sisters  with  five 
pound  apiece,  so  that  he  brought  them  up  in  godliness 
and  fear  of  God.  He  kept  hospitality  for  his  neighbors 
and  some  alms  he  gave  to  the  poor.  And  all  this  he  did 
of  the  same  farm,  where  he  that  now  hath  it  payeth  six- 
teen pounds  rent  or  more  by  year,  and  is  not  able  to  do 
anything  for  his  Prince,  for  himself,  nor  for  his  children, 
nor  to  give  a  cup  of  drink  to  the  poor." 

"In  this  way,"  said  Sir  Thomas  More,  referring  to  the 
ejectment  of  small  farmers  which  characterized  this  ad- 
vance of  rent,  "it  comes  to  pass  that  these  poor  wretches, 
men,  women,  husbands,  orphans,  widows,  parents  with 
little  children,  householders  greater  in  number  than  in 
wealth,  all  of  these  emigrate  from  their  native  fields, 
without  knowing  where  to  go." 

And  so  from  the  stuff  of  the  Latimers  and  Mores — 
from  the  sturdy  spirit  that  amid  the  flames  of  the  Oxford 
stake  cried,  "Play  the  man.  Master  Ridley!"  and  the 
mingled  strength  and  sweetness  that  neither  prosperity 
could  taint  nor  the  ax  of  the  executioner  abash — were 
evolved  thieves  and  vagrants,  the  mass  of  criminality  and 
pauperism  that  still  blights  the  innermost  petals  and  preys 
a  gnawing  worm  at  the  root  of  England's  rose. 

But  it  were  as  well  to  cite  historical  illustrations  of 
the  attraction  of  gravitation.  The  principle  is  as  uni- 
versal and  as  obvious.  That  rent  must  reduce  wages,  is 
as  clear  as  that  the  greater  the  subtracter  the  less  the 


290  THE   PROBLEM   SOLVED.  Book  V. 

remainder.  That  rent  does  reduce  wages,  any  one, 
wherever  situated,  can  see  by  merely  looking  around 
him. 

There  is  no  mystery  as  to  the  cause  which  so  suddenly 
and  so  largely  raised  wages  in  California  in  1849,  and  in 
Australia  in  1852.  It  was  the  discovery  of  the  placer 
mines  in  unappropriated  land  to  which  labor  was  free 
that  raised  the  wages  of  cooks  in  San  Francisco  restau- 
rants to  1500  a  month,  and  left  ships  to  rot  in  the  harbor 
without  officers  or  crew  until  their  owners  would  consent 
to  pay  rates  that  in  any  other  part  of  the  globe  seemed 
fabulous.  Had  these  mines  been  on  appropriated  land, 
or  had  they  been  immediately  monopolized  so  that  rent 
could  have  arisen,  it  would  have  been  land  values  that 
would  have  leaped  upward,  not  wages.  The  Comstock 
lode  has  been  richer  than  the  placers,  but  the  Comstock 
lode  was  readily  monopolized,  and  it  is  only  by  virtue  of 
the  strong  organization  of  the  Miners'  Association  and 
the  fears  of  the  damage  which  it  might  do,  that  enables 
men  to  get  four  dollars  a  day  for  parboiling  themselves 
two  thousand  feet  underground,  where  the  air  that  they 
breathe  must  be  pumped  down  to  them.  The  wealth  of 
the  Comstock  lode  has  added  to  rent.  The  selling  price 
of  these  mines  runs  up  into  hundreds  of  millions,  and  it 
has  produced  individual  fortunes  whose  monthly  returns 
can  be  estimated  only  in  hundreds  of  thousands,  if  not  in 
millions.  Nor  is  there  any  mystery  about  the  cause 
which  has  operated  to  reduce  wages  in  California  from 
the  maximum  of  the  early  days  to  very  nearly  a  level 
with  wages  in  the  Eastern  States,  and  that  is  still  operat- 
ing to  reduce  them.  The  productiveness  of  labor  has  not 
decreased,  on  the  contrary  it  has  increased,  as  I  have  be- 
fore shown;  but,  out  of  what  it  produces  labor  has  now 
to  pay  rent.  As  the  placer  deposits  were  exhausted, 
labor  had  to  resort  to  the  deeper  mines  and  to  agricul- 
tural land,  but  monopolization  of  these  being  permitted. 


Chap.  II.  THE   PERSISTENCE    OF    POVERTY.  291 

men  now  walk  the  streets  of  San  Francisco  ready  to  go  to 
work  for  almost  anything — for  natural  opportunities  are 
now  no  longer  free  to  labor. 

The  truth  is  self-evident.  Put  to  any  one  capable  of 
consecutive  thought  this  question: 

"Suppose  there  should  arise  from  the  English  Channel 
or  the  German  Ocean  a  No-man's  land  on  which  common 
labor  to  an  unlimited  amount  should  be  able  to  make  ten 
shillings  a  day  and  which  should  remain  unappropriated 
and  of  free  access,  like  the  commons  which  once  com- 
prised so  large  a  part  of  English  soil.  What  would  be 
the  effect  upon  wages  in  England?" 

He  would  at  once  tell  you  that  common  wages 
throughout  England  must  soon  increase  to  ten  shillings 
a  day. 

And  in  response  to  another  question,  "What  would  be 
the  effect  on  rents?"  he  would  at  a  moment's  reflection 
say  that  rents  must  necessarily  fall;  and  if  bethought  out 
the  next  step  he  would  tell  you  that  all  this  would  hap- 
pen without  any  very  large  part  of  English  labor  being 
diverted  to  the  new  natural  opportunities,  or  the  forms 
and  direction  of  industry  being  much  changed;  only  that 
kind  of  production  being  abandoned  which  now  yields  to 
labor  and  to  landlord  together  less  than  labor  could  se- 
cure on  the  new  opportunities.  The  great  rise  in  wages 
would  be  at  the  expense  of  rent. 

Take  now  the  same  man  or  another — some  hard-headed 
business  man,  who  has  no  theories,  but  knows  how  to 
make  money.  Say  to  him:  "Here  is  a  little  village;  in 
ten  years  it  will  be  a  great  city — in  ten  years  the  railroad 
will  have  taken  the  place  of  the  stage  coach,  the  electric 
light  of  the  candle;  it  will  abound  with  all  the  ma- 
chinery and  improvements  that  so  enormously  multiply 
the  effective  power  of  labor.  Will,  in  ten  years,  interest 
be  any  higher?" 

He  will  tell  you,  "No!" 


292  THE   PROBLEM   SOLVED.  Book  V. 

"Will  the  wages  of  common  labor  be  any  higher;  will 
it  be  easier  for  a  man  who  has  nothing  but  his  labor  to 
make  an  independent  living?" 

He  Avill  tell  you,  "No;  the  wages  of  common  labor  will 
not  be  any  higher;  on  the  contrary,  all  the  chances  are 
that  they  will  be  lower;  it  will  not  be  easier  for  the  mere 
laborer  to  make  an  independent  living;  the  chances  are 
that  it  will  be  harder." 

"What,  then,  will  be  higher?" 

"Kent;  the  value  of  land.  Go,  get  yourself  a  piece  of 
ground,  and  hold  possession." 

And  if,  under  such  circumstances,  you  take  his  advice, 
you  need  do  nothing  more.  You  may  sit  down  and 
smoke  your  pipe;  you  may  lie  around  like  the  lazzaroni 
of  Naples  or  the  leperos  of  Mexico;  you  may  go  up  in  a 
balloon,  or  down  a  hole  in  the  ground;  and  without  doing 
one  stroke  of  work,  without  adding  one  iota  to  the 
wealth  of  the  community,  in  ten  years  you  will  be  rich! 
In  the  new  city  you  may  have  a  luxurious  mansion;  but 
among  its  public  buildings  will  be  an  almshouse. 

In  all  our  long  investigation  we  have  been  advancing 
to  this  simple  truth:  That  as  land  is  necessary  to  the 
exertion  of  labor  in  the  production  of  wealth,  to  com- 
mand the  land  which  is  necessary  to  labor,  is  to  command 
all  the  fruits  of  labor  save  enough  to  enable  labor  to 
exist.  We  have  been  advancing  as  through  an  enemy's 
country,  in  which  every  step  must  be  secured,  every  posi- 
tion fortified,  and  every  by-j)ath  explored;  for  this  simple 
truth,  in  its  application  to  social  and  political  problems,  is 
hid  from  the  great  masses  of  men  partly  by  its  very 
simplicity,  and  in  greater  part  by  widespread  fallacies 
and  erroneous  habits  of  thought  which  lead  them  to  look 
in  every  direction  but  the  right  one  for  an  explanation 
of  the  evils  which  oppress  and  threaten  the  civilized 
world.  And  back  of  these  elaborate  fallacies  and  mis- 
leading theories   is  an  active,  energetic  power,  a  power 


Chap.  II.  THE   PERSISTENCE    OF   POVERTY.  293 

that  in  every  country,  be  its  political  forms  what  they 
may,  writes  laws  and  molds  thought — the  power  of  a  vast 
and  dominant  pecuniary  interest. 

But  so  simple  and  so  clear  is  this  truth,  that  to  see  it 
fully  once  is  always  to  recognize  it.  There  are  pictures 
which,  though  looked  at  again  and  again,  present  only  a 
confused  labyrinth  of  lines  or  scroll  work — a  landscape, 
trees,  or  something  of  the  kind — until  once  the  attention 
is  called  to  the  fact  that  these  things  make  up  a  face  or  a 
figure.  This  relation  once  recognized,  is  always  after- 
ward clear.  It  is  so  in  this  case.  In  the  light  of  this 
truth  all  social  facts  group  themselves  in  an  orderly  re- 
lation, and  the  most  diverse  phenomena  are  seen  to 
spring  from  one  great  principle.  It  is  not  in  the  rela- 
tions of  capital  and  labor;  it  is  not  in  the  pressure  of 
population  against  subsistence,  that  an  explanation  of 
the  unequaled  development  of  our  civilization  is  to  be 
found.  The  great  cause  of  inequality  in  the  distribution 
of  wealth  is  inequality  in  the  OAvnership  of  land.  The 
ownership  of  land  is  the  great  fundamental  fact  which 
ultimately  determines  the  social,  the  political,  and  con- 
sequently the  intellectual  and  moral  condition  of  a  peo- 
ple. And  it  must  be  so.  For  land  is  the  habitation  of 
man,  the  storehouse  upon  which  he  must  draw  for  all  his 
needs,  the  material  to  which  liis  labor  must  be  applied 
for  the  supply  of  all  his  desires;  for  even  the  products 
of  the  sea  cannot  be  taken,  the  light  of  the  sun  enjoyed, 
or  any  of  the  forces  of  nature  utilized,  without  the  use 
of  land  or  its  products.  On  the  land  we  are  born,  from 
it  we  live,  to  it  we  return  again — children  of  the  soil  as 
truly  as  is  the  blade  of  grass  or  the  flower  of  the  field. 
Take  away  from  man  all  that  belongs  to  land,  and  he  is 
but  a  disembodied  spirit.  Material  progress  cannot  rid 
us  of  our  dependence  upon  land;  it  can  but  add  to  the 
power  of  producing  wealth  from  land;  and  hence,  when 
land  is  monoi)olized,  it  might  go  on  to  infinity  without 


294  THE   PROBLEM   SOLVED.  Book  V. 

increasing  wages  or  improving  the  condition  of  those  who 
have  but  their  labor.  It  can  but  add  to  the  value  of 
land  and  the  power  which  its  possession  gives.  Every- 
where, in  all  times,  among  all  peoples,  the  possession  of 
land  is  the  base  of  aristocracy,  the  foundation  of  great 
fortunes,  the  source  of  power.  As  said  the  Brahmins, 
ages  ago — 

"To  loliomsoever  the  soil  at  any  time  belongs,  to  him  be- 
long the  fruits  of  it.  White  parasols  a?icl  elephants  mad 
with  pride  are  thefioivers  of  a  grant  of  land.  ^^ 


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